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NATIONAL OPEN UNIVERSITY OF NIGERIA

FACULTY OF SOCIAL SCIENCES

TECHNOLOGY AND SOCIOECONOMIC DEVELOPMENT

DES 222

COURSE GUIDE

Course Developers:

Dr Amaka Metu

and

Dr Uju Ezenekwe

Department of Economics,

Nnamdi Azikiwe University, Awka

Anambra State

Course Editor:

Prof Anthony Akamobi

Chukwuemeka Odumegwu Ojukwu University, Igbariam

Anambra State

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© 2019 by NOUN Press

National Open University of Nigeria,

Headquarters,

University Village,

Plot 91, Cadastral Zone,

Nnamdi Azikiwe Expressway,

Jabi, Abuja.

Lagos Office

14/16 Ahmadu Bello Way,

Victoria Island, Lagos.

e-mail: centralinfo@nou.edu.ng

URL: www.nou.edu.ng

All rights reserved. No part of this book may be reproduced, in any form or by any means,

without permission in writing from the publisher. Printed: 2018 ISBN: 978-058-023-X.

Printed:

ISBN:

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CONTENT

Introduction

Course Content

Course Aims

Course Objectives

Working through This Course

Course Materials

Study Units

Textbooks and References

Assignment File

Presentation Schedule

Assessment

Tutor-Marked Assignment (TMAs)

Final Examination and Grading

Course Marking Scheme

Course Overview

How to Get the Most from This Course

Tutors and Tutorials

Summary

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Introduction

Welcome to DES 222: Technology And Socio-Economic Development.

DES 222: Technology And Socio-Economic Development is a two-credit and one-

semester undergraduate course for Economics students. The course is made up of twelve

units spread across fifteen lecture weeks. This course guide gives you an insight to how

technology and socio-economic development interact in a broader way and how to study

and make use of its analysis in economics. It guides you on how to achieve the course aims

and objectives successfully by adhering to the suggested general guidelines. Answers to

your tutor marked assignments (TMAs) are within the material.

Course Content

This course is basically on technology and socioeconomic development because as an

aspiring economist, you should be able to apply and adopt new techniques to

socioeconomic problems. The topics covered include: Role of technology and historical

growth of major economies; nature of technology change and socio-economic implication;

technology transfer, diffusion and adoption of new technologies.

Course Aims

The aims of this course is to give students a comprehensive understanding as regards:

Fundamental concept of technology, innovation, technological transfer, diffusion

and adaption.

To familiarize students with the dynamics of socioeconomic development.

To guide the students to understand the nature of technological change and the

socioeconomic implications.

To expose the students on the role of technology in the historical growth of major

economies of the world.

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To stimulate the students to understand issues around technological change and

industrial competitiveness.

Course Objectives

To achieve the aims of this course, there are different specific objectives which the course

is out to achieve and they are set out for each unit. Each unit starts with some listed

objectives and students are expected to read them before working through the unit. After

completing each unit, students are to refer back to the stated objectives. The essence is to

assist the students in accomplishing the tasks entailed in this course and help the students

assess if they have done what was required from the unit. At the end of the course period,

the students are expected to be able to:

Explain some basic technology and socioeconomic development concepts

Differentiate between growth and development.

Illustrate the difference between developed and developing economies

Understand the determinants of economic development

Describe technology life cycle

Trace the history of technology evolution through industrial revolutions

Give a brief history of technology development in Nigeria

Understand the socioeconomic implications of technological change in developing

countries

Explain the process of technological change in developing countries

Understand the issue of diversity in the choice of appropriate technology

Explain the challenges of technology transfer especially in developing countries

Working Through The Course

To successfully complete this course, students are required to read the study units, the

referenced books and other materials on the course. Each unit contains self-assessment

exercises called Student Assessment Exercises (SAE), and in some cases will be required

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to submit assignments for assessment purposes. At the end of the course there is a final

examination. This course should take about 15weeks to complete and some components of

the course are outlined under the course material subsection.

Course Material

This section contains the major component of the course and time allocation for a

successful and timely completion of the course unit. The list includes:

1. Course guide

2. Study unit

3. List of References

4. Assignment file

5. Presentation schedule

Study Unit

There are 12 units in this course which needs to be studied diligently and carefully so as to

achieve the set objectives.

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MODULE ONE: ROLE OF TECHNOLOGY AND HISTORICAL GROWTH OF

MAJOR ECONOMIES

Unit 1: The Basic Concepts: Technology, Innovation and Socioeconomic

Development

Unit 2: Economic Growth and Socioeconomic Development

Unit 3: Developed and Developing Economies

Unit 4: History of Technology in Industrial Revolution

MODULE TWO: NATURE OF TECHNOLOGICAL CHANGE AND

SOCIOECONOMIC IMPLICATIONS

Unit 1: Technological Change and Technology Life Cycle.

Unit 2: Technological Change and Technical Progress.

Unit 3: Socioeconomic Implications of Technological Change.

Unit 4: Industrial Competition and Technology Change

MODULE 3: TECHNOLOGY TRANSFER, DIFFUSION AND ADOPTION

Unit 1: Technology Transfer and Socioeconomic Development

Unit 2: Technology Diffusion and Adoption

Unit 3: Economic Theories of Technology Change

Unit 4: Issues of Technology Acquisition in Developing Countries.

Each study unit will take at least two hours, and it includes the introduction, objective,

main content, self-assessment exercise, conclusion, summary and reference. Other areas

border on the Tutor-Marked Assessment (TMA) questions. Some of the self-assessment

exercise will necessitate discussion, brainstorming and argument with colleagues. Students

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are strongly advised to do so in order to understand and get acquainted with the course and

its objectives.

There are also reference materials listed for further reading so as to get additional

information. Study the materials; practice the self-assessment exercises and tutor-marked

assignment (TMA) questions for greater and detailed understanding of the course. All these

are necessary in order to achieve the stated aim and objectives.

Textbook and References

For further reading and more detailed information about the course, the following materials

are recommended:

Textbook and References

For further reading and more detailed information about the course, the following materials

are recommended:

Akubue, A. (2000). Appropriate technology for socioeconomic development in Third

world countries. The Journal of Technology Studies, 26(1), 33-43

https://www.jstor.org/stable/43604562

Arthur, W. B. (2009). The Nature of Technology. New York: Free Press. p. 28.

ISBN 978- 1-4165-4405-0.

Beaney, M. (2014). Analysis (Stanford Encyclopedia of Philosophy). Available online:

http://plato.stanford.edu/entries/analysis/

Boylan, M., & Johnson, C. (2010). Philosophy: An innovative introduction: Fictive

narrative, primary texts and responsive writing. Boulder: Westview Press.

Davis, F. D., Bagozzi, R. P., and Warshaw, P. R., (1989). User acceptance of computer

technology: A Comparison of Two Theoretical Models. Management Science

(35), 982-1003.

Eneh, O. C. (2010). Technology transfer, adoption and integration. A review of Applied

Science, 10(16), 1814-1819.

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Fashola, M. A. (2001). Macroeconomic theory highlights and policy extensions for less-

developed economies. (3rd ed.). Lagos: Concepts Publishers Ltd.

Gallivan, M. J., (2001). Organizational adoption and assimilation of complex

technological innovations: Development and application of a new framework.

Database for Advances in Information Systems, (35)3, 51-85.

Grubler, A. (n.d). Technology and global change. International Institute for Applied

Systems Analysis Laxenburg, Austria

Heeks, R. & Stanforth, C. (2015). Technological change in developing countries:

Opening the black box of process using actor-network theory. Development

Studies Research, 2(1), 33-50.

Hicks, N. & Streeten, P. (1979). Indicators of development: The search for a basic need

yardstick. World Development, 7(6), 568-580.

DOI:10.1016/0305-750X(79)90093-7

Howitt, P. (2007). Innovation, Competition and Growth: A Schumpeterian Perspective on

Canada’s Economy. C. D. Howe Institute Commentary

https://web.archive.org/web/20110717090449/http://www.cdhowe.org/pdf/comme

ntary_246.pdf

Jhingan, M. L. (2007). The economics of development and planning. (39th ed.). Delhi:

Vrinda Publications (P) Ltd.

Kuznets, S. (1973). Modern economic growth: Findings and reflections. The American

Economic Review, 63(3).

Mathieson, K., Peacock, E., & Chin, W., (2001). Extending the technology acceptance

model: The influence of perceived user resources. Database for Advances in

Information Systems, (32)3, 86 – 112.

Metu, A. G. (2017). Economic growth and development. In U. R. Ezenekwe, K. O. Obi,

M. C. Uzonwanne & C. U. Kalu (Eds). Principles of economics II. (164 - 178).

Nigeria: Djompol Printers & Publishers.

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Musa, P. F., Meso, P., & Mbarika, V. W. (2005). Toward sustainable adoption of

technologies for human development in sub-Saharan Africa: Precursors,

diagnostics, and prescriptions. Communication for the Association of the

Information System, 15(33).

Niosi, J. (2008). Technology, development and innovation system. An introduction

Journal of Development Studies, 44(3), 613-621

Olajide, O. T. (2004). Theories of economic development and planning. Lagos: Pumark

Nigeria Ltd.

Rani, S. S., Rao, B. M., Ramaro, P., & Kumar, S. (2018). Technology transfer- Models

and Mechanism. International Journal of Mechanical Engineering and

Technology, 9(6), 971-982

http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=9&IType=6

Romer, P. (2007). From the Concise Encyclopedia of Economics. D. R. Henderson,

(Ed.), Liberty Fund. www.ecolib.org/library/Enc /Economic Growth.

Simurina, J & Tica, J. (2006). Historical perspectives of the role of technology in

economic development. Working Paper Series No 6-10.

Suad, M. (2000). Development through technology transfer. Bristol: Intellect Books/

Szirmal, A. (n.d). The dynamics of socioeconomic development

Shun, L. C. (2017). A comprehensive definition of technology from an Ethological

perspective. Social Sciences (ISSN 2076-0760).

Tarek Khalil & Ravi Shankar (2016). Management of technology (2nd ed.). India:

McGraw Hill Education. pp 372- 380.

Todaro, M. P. & Smith, S. C. (2012). Economic development, 11th ed. Boston: United

States of America: Pearson Publishers.

Wilson, G. (2008). Our knowledge ourselves: Engineers (re) thinking technology in

development. Journal of International Development, 20(6), 739-750.

World Bank (2008). Global economic prospects 2008: Technology diffusion in the

developing world. Washington DC: World Bank.

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Assignment File

The assignment files and marking scheme will be made available to you. This file presents

you with details of the work you must submit to your tutor for marking. The marks you

obtain from these assignments shall form part of your final mark for this course. Additional

information on assignments will be found in the assignment file and later in this Course

Guide in the section on assessment.

There are four assignments in this course. The four course assignments will cover:

Assignment 1 - All TMAs’ question in Units 1 – 4 (Module 1)

Assignment 2 - All TMAs' question in Units 5 – 8 (Module 2)

Assignment 3 - All TMAs' question in Units 9 – 12 (Module 3)

Presentation Schedule

The presentation schedule included in the course materials gives the important dates for

the completion of tutor-marking assignments and attending tutorials. Students are required

to submit all assignments and before or on the due date. Kindly guide against falling behind

in your work as this may affect your overall result.

Assessment

The course will be assessed using two formats: The tutor-marked assignments as well as a

written examination. The assignments submit to your tutor for assessment will count for

30% of your total course mark while the final written examination of three hours duration

will count for the remaining 70% of your total course mark.

Tutor-Marked Assignments (TMAs)

There are three tutor-marked assignments according to each unit in this course. You will

submit all the assignments. You are encouraged to work all the questions thoroughly. The

TMAs constitute 30% of the total score.

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Assignment questions for the units in this course are contained in the Assignment File. You

will be able to complete your assignments from the information and materials contained in

your set books, reading and study units. However, it is desirable that you demonstrate that

you have read and researched more widely than the required minimum. You should use

other references to have a broad viewpoint of the subject and also to give you a deeper

understanding of the subject. When you have completed each assignment, send it, together

with a TMA form, to your tutor. Make sure that each assignment reaches your tutor on or

before the deadline given in the Presentation File.

Final Examination and Grading

The final examination is of three hours duration and have a grade score of 70% of the total

course grade. The examination will consist of questions which reflect the types of self-

assessment practice exercises and tutor-marked problems you have previously

encountered.

Revise the entire course material using the time between finishing the last unit in the

module and that of sitting for the final examination. You might find it useful to review your

self-assessment exercises, tutor-marked assignments and comments on them before the

examination. Please note that all areas of the course will be assessed.

Course Marking Scheme

The Table presented below indicates the total marks (100%) allocation.

Assignment Marks

Assignments (Best three assignments out of four that is

marked)

30%

Final Examination 70%

Total 100%

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Course Overview

The Table presented below indicates the units, number of weeks and assignments to be

taken by you to successfully complete the course, technology and socio-economic

development (DES 222)

Units Title of Work Week’s

Activities

Assessment

(end of unit)

Course Guide

MODULE 1: ROLE OF TECHNOLOGY AND HISTORICAL GROWTH

OF MAJOR ECONOMIES

1 The Basic Concepts: Technology, Innovation,

and Socioeconomic Development

Week 1 Assignment 1

2 Economic Growth and Socioeconomic

Development

Week 2 Assignment 1

3 Developed and Developing Economies Week 3 Assignment 1

4 History of Technology in Industrial

Revolution

Week 4 Assignment 1

MODULE 2: NATURE OF TECHNOLOGICAL CHANGE AND

SOCIOECONOMIC IMPLICATIONS

1 Technological Change and Technology Life

Cycle

Week 5 Assignment 2

2 Technological Change and Technical Progress Week 6 Assignment 2

3 Socioeconomic Implications of Technological

Change

Week 7 Assignment 2

4 Industrial Competition and Technology

Change

Week 8 Assignment 2

MODULE 3: TECHNOLOGY TRANSFER, DIFFUSION AND

ADOPTION OF NEW TECHNOLOGIES

1 Technology Transfer and Socioeconomic

Implications

Week 9 Assignment 3

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2 Technology Diffusion and Adoption Week 10 Assignment 3

3 Economic Theories of Technology Change Week 11 Assignment 3

4 Issues of Technology Acquisition in

Developing Countries.

Week 12 Assignment 3

How to Get The Most From This Course

In distance learning the study units replace the university lecturer. This is one of the great

advantages of distance learning; you can read and work through specially designed study

materials at your own pace and at a time and place that suit you best.

In the same way that a lecturer might send you some readings to do, the study units guides

you on when to read your books or other materials. Think of it as reading the lecture instead

of listening to a lecturer and embark on discussions with your colleagues. Similarly, just

as a lecturer might give you an in-class exercise, your study units provides exercises for

you to do at appropriate points.

Each of the study units follow a common format. The first item is an introduction to the

subject matter of the unit and how a particular unit is integrated with the other units and

the course as a whole. Next is a set of learning objectives. These objectives let you know

what you should be able to do by the time you have completed the unit. Hence, use these

objectives as a guide. When you have finished the unit you must go back and check whether

you have achieved the objectives. If you make a habit of doing this you will improve your

chances of passing the course and getting the best grades.

The main body of the unit guides you through the required reading from other sources.

This will usually be either from your set books or from a reading section. Some units

require you to undertake practical overview of historical events. You will be directed when

you need to embark on discussion and guided through the tasks you must do.

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The purpose of the practical overview of some certain historical economic issues are in

twofold. First, it will enhance your understanding of the material in the unit. Second, it will

give you practical experience and skills to evaluate economic arguments, and understand

the roles of history in guiding current economic policies and debates outside your studies.

In any event, most of the critical thinking skills you will develop during studying are

applicable in normal working practice, so it is important that you encounter them during

your studies.

Self-assessments are interspersed throughout the units, and answers are given at the end of

the units. Working through these tests will help you to achieve the objectives of the unit

and prepare you for the assignments and the examination. You should do each self-

assessment exercises as you come to it in the study unit. Also, ensure to master some major

historical dates and events during the course of studying the material.

The following is a practical strategy for working through the course. If you run into any

trouble, consult your tutor. Remember that your tutor's job is to help you. When you need

help, don't hesitate to call and ask your tutor to provide it.

1. Read this Course Guide thoroughly.

2. Organize a study schedule. Refer to the `Course overview' for more details. Note

the time you are expected to spend on each unit and how the assignments relate to

the units. Important information, e.g. details of your tutorials, and the date of the

first day of the semester is available from study centre. You need to gather together

all this information in one place, such as your dairy or a wall calendar. Whatever

method you choose to use, you should decide on and write in your own dates for

working through each unit.

3. Once you have created your own study schedule, do everything you can to stick to

it. The major reason that students fail is that they get behind with their course work.

If you get into difficulties with your schedule, please let your tutor know before it

is too late to help.

4. Turn to Unit 1 and read the introduction and the objectives for the unit.

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5. Assemble the study materials. Information about what you need for a unit is given

in the `Overview' at the beginning of each unit. You will also need both the study

unit you are working on and one of your set books on your desk at the same time.

6. Work through the unit. The content of the unit itself has been arranged to provide a

sequence for you to follow. As you work through the unit you will be instructed to

read sections from your set books or other articles. Use the unit to guide your

reading.

7. Up-to-date course information will be continuously delivered to you at the study

centre.

8. Work before the relevant due date (about 4 weeks before due dates), get the

Assignment File for the next required assignment. Keep in mind that you will learn

a lot by doing the assignments carefully. They have been designed to help you meet

the objectives of the course and, therefore, will help you pass the exam. Submit all

assignments no later than the due date.

9. Review the objectives for each study unit to confirm that you have achieved them.

If you feel unsure about any of the objectives, review the study material or consult

your tutor.

10. When you are confident that you have achieved a unit's objectives, you can then

start on the next unit. Proceed unit by unit through the course and try to pace your

study so that you keep yourself on schedule.

11. When you have submitted an assignment to your tutor for marking do not wait for

it return `before starting on the next units. Keep to your schedule. When the

assignment is returned, pay particular attention to your tutor's comments, both on

the tutor-marked assignment form and also written on the assignment. Consult your

tutor as soon as possible if you have any questions or problems.

12. After completing the last unit, review the course and prepare yourself for the final

examination. Check that you have achieved the unit objectives (listed at the

beginning of each unit) and the course objectives (listed in this Course Guide)

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Tutors and Tutorials

There are some hours of tutorials (2-hours sessions) provided in support of this course. You

will be notified of the dates, times and location of these tutorials. Together with the name

and phone number of your tutor, as soon as you are allocated a tutorial group.

Your tutor will mark and comment on your assignments, keep a close watch on your

progress and on any difficulties you might encounter, and provide assistance to you during

the course. You must mail your tutor-marked assignments to your tutor well before the due

date (at least two working days are required). They will be marked by your tutor and

returned to you as soon as possible.

Do not hesitate to contact your tutor by telephone, e-mail, or discussion board if you need

help. The following might be circumstances in which you would find help necessary.

Contact your tutor if:

• You do not understand any part of the study units or the assigned readings

• You have difficulty with the self-assessment exercises

• You have a question or problem with an assignment, with your tutor's comments on an

assignment or with the grading of an assignment.

You should try your best to attend the tutorials. This is the only chance to have face to face

contact with your tutor and to ask questions which are answered instantly. You can raise

any problem encountered in the course of your study. To gain the maximum benefit from

course tutorials, prepare a question list before attending them. You will learn a lot from

participating in discussions actively.

Summary

The course, Technology and Socio-Economic Development (DSS 222) exposes students

to the historical growth of major economies and the role of technology in socioeconomic

development. You will also be introduced to technology life cycle as well the explanation

of economic growth and socioeconomic development; the differences between developed

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and developing economies. This course also gives an insight into the nature of

technological change and socioeconomic implications of technological change. Thereafter

you will stimulated to understanding the role of technological change in enhancing

industrial competitiveness. Finally, it shall enlighten you about technology transfer,

diffusion and adoption of new technologies in developing economies.

However, to gain a lot from the course please try to apply anything you learn in the course

to term paper writing in other economics courses. We wish you success with the course

and hope that you will find it fascinating and handy.

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MODULE ONE: ROLE OF TECHNOLOGY AND HISTORICAL GROWTH OF

MAJOR ECONOMIES

Unit 1: The Basic Concepts: Technology, Innovation and Socioeconomic

Development

Unit 2: Economic Growth and Socioeconomic Development

Unit 3: Developed and Developing Economies

Unit 4: History of Technology in Industrial Revolution

UNIT 1 THE BASIC CONCEPTS: TECHNOLOGY, INNOVATION AND

SOCIOECONOMIC DEVELOPMENT

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Definition and Explanation of Technology

3.2 Characteristics of Technology Evolution

3.3 Phases of Technology Development

3.3.1 Types of Innovation

3.3.2 Differences between Technology and Innovation

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

This unit provides an overview of diverse conceptualizations and terminologies that have

been introduced to describe technology and how it evolves. First, technology is defined as

the invention of both material and immaterial tools in order to solve real-world problems.

It consists of both hardware and software (the knowledge required to produce and use

technological hardware). Second, the essential feature of technology is outlined.

Technologies change all the time both individually, and in their aggregate, in an effort of

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replacing older technologies by newer ones. The most essential terminology distinguishes

between invention (discovery), innovation (first commercial application) and diffusion

(widespread replication and growth) of technologies. In this unit, because new

developments must be explored and adopted.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

Explain the concept of technology

Explain the phases of technology development

Differentiate between technology and innovations

3.0 MAIN CONTENT

3.1 Definition and Explanation of Technology

The term technology comes from two Greek words: tehno and logos (science). It is a

science to the sum of knowledge about procedures and processes used in the manufacture

of material production. Technology, in a layman’s understanding consists of manufactured

objects such as axes, arrowheads, and their modern equivalents for the purpose of either to

enhance human capabilities or to aid humans to perform tasks they could not otherwise

perform. But technology is more than that. It requires a larger system including hardware

(such as machinery or a manufacturing plant), factor inputs (labor, energy, raw materials,

capital), and software (know-how, human knowledge and skills). The latter, for which the

French use the term technique, represents the disembodied nature of technology, its

knowledge base. Thus, technology includes both what things are made and how things are

made.

Technology simply means the invention of both material and immaterial tools in order to

solve real-world problems. Technology is also the sum of techniques, skills, methods, and

processes used in the production of goods or services or in the accomplishment of

objectives, such as scientific investigation especially in industry. Little wonder why

technology replaces human workers with mechanical or electronic devices. An example is

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in the case ATM (Automated Teller Machine) in the banking industry. Finally, it makes

use of fewer resources to manufacture goods more efficiently.

Technology concerns itself with understanding how knowledge is creatively applied to

organized tasks involving people and machines that meet sustainable goals (Lane 2016).

Three things to learn from this definition are:

1. Technology is about taking action to meet a human need rather than merely

understanding the workings of the natural world, which is the goal of science. An

example is the invention of Microscope.

2. It goes beyond the use of scientist knowledge to include both values as much as

facts, practical craft knowledge and the practical knowledge. The invention of iPod

is an example of a small device accommodating much music with creative design.

3. It covers the intended and unintended interactions between products (machines,

devices, artifacts) and the people and systems that make them, use them or are

affected by them through various processes.

Technology is a hands-on thing and it involves skills like engineering, communicating,

designing, developing, innovating, managing, manufacturing, modeling and systems

thinking. It also has its proms and corns.

SELF-ASSESSMENT EXERCISE

i. Explain what you understand by technology

3.2 Characteristics of Technology Evolution

Technological evolution is neither simple nor linear. Its four most important distinctive

characteristics are uncertain, dynamic, systemic, and cumulative.

I. First, technological uncertainty derives from the fact that there always exists a

variety of solutions to perform a particular task. It is always uncertain which might

be best, taking into account technical, social and economic criteria. Technological

uncertainty prevails in all stages of technological evolution right from initial design,

through success or failure in the marketplace, to eventual environmental impacts

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and spin-off effects. Since uncertainty will always persist, the correct strategy to

forecast technological change is to also experiment with technological variety.

ii. Secondly, technology is dynamic and keeps changing all the time. Change includes

a continuous introduction of new varieties and continuous subsequent

improvements and modifications. The main factors governing technology dynamics

are, first, the continuous replacement of capital stock as it ages and economies

expand and, second and most important, new inventions.

iii. Third, technological evolution is systemic and cannot be treated separately. A new

technology needs not only to be invented and designed, but it needs to be produced

with other technologies. It also requires infrastructures. For instance, a telephone

needs a telephone network; a car needs a road network. This interdependence of

technologies causes enormous difficulties in implementing large-scale changes.

Though this is what causes technological changes to have such persistent and

extensive impacts once they are implemented. These mutually interdependent and

cross-enhancing sociotechnical systems of production and use cannot be considered

in terms of single technologies, but must be considered in terms of the mutual

interactions among all contemporary technological, institutional, and social change.

iv. Fourth, technological change is cumulative based on knowledge and previous

experiences. Only in rare cases is knowledge lost and not reproducible. A new

artifact, like a new species, is seldom designed from the scratch. Hence,

technological knowledge and the stock of technologies in use grow continuously.

SELF-ASSESSMENT EXERCISE

i. Discuss the at least 3 characteristics of technology evolution.

3.3. Phases in Technology Development

Joseph A. Schumpeter an Austrian economist distinguished three important phases in

technology development: invention, innovation, and diffusion.

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Invention - is the first demonstration of the principal, physical feasibility of a

proposed new solution. An invention is usually related to some scientific discovery,

frequently measured through patent applications and statistics. However, an

invention by itself often offers no hints about possible applications despite the

technological nostalgia surrounding the inventor’s human ingenuity. Even where

applications are apparent, an invention by itself has no economic or social

significance whatsoever.

Innovation - is defined is the point when a newly discovered material or a newly

developed technique is being put into regular production for the first time, or when

an organized market for the new product is first created. A distinction is frequently

made between process and product innovations. Process innovation refers to new

methods of production, while the product innovation refers to directly usable

technological hardware, for instance, consumer products such as video recorders

and compact disc players. It is an essential feature of the evolutionary character of

technological change. Innovation is the implementation of creative ideas in order to

generate value, usually through increased revenues, reduced costs or both.

Innovation involves executing an idea which address a specific challenge and

achieves value for both the company and the customer alike.

Diffusion - is the widespread replication of a technology and its assimilation in a

socioeconomic setting. Diffusion is the final, and sometimes painful, test of whether

an innovation can create a niche of its own or successfully supplant existing

practices and artifacts. Technology assumes significance only through its

application (innovation) and subsequent widespread replication (diffusion).

Otherwise it remains either knowledge that is never applied, i.e., an invention

without subsequent innovation, or an isolated technological curiosity, i.e., an

innovation without subsequent diffusion.

3.3.1 Types of Innovation

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I. Incremental Innovation: Incremental Innovation is the most common form of

innovation. It utilizes your existing technology and increases value to the customer

(features, design changes, etc.) within your existing market. Almost all companies

engage in incremental innovation in one form or another.

II. Disruptive Innovation: Disruptive innovation, also known as stealth innovation,

involves applying new technology or processes to your company’s current

market. It is stealthy in nature since newer technology will often be inferior to

existing market technology. This newer technology is often more expensive, has

fewer features, harder to use, and is not as artfully pleasing. It is only after a few

iterations that the newer technology surpasses the old and disrupts all existing

companies. By then, it might be too late for the established companies to quickly

compete with the newer technology.

III. Architectural Innovation: Architectural innovation is simply taking the lessons,

skills and overall technology and applying them within a different market. This

innovation is amazing at increasing new customers as long as the new market is

receptive. Most of the time, the risk involved in architectural innovation is low due

to the reliance and reintroduction of proven technology. Though most of the time it

requires some adjustments to match the requirements of the new market.

IV. Radical Innovation: This gives birth to new industries (or swallows existing ones)

and it involves creating revolutionary technology. The airplane, for example, was

not the first mode of transportation, but it is revolutionary as it allowed

commercialized air travel to develop and prosper.

3.3.2 Differences between technology and innovation

Technology is the application of scientific knowledge (things known) for the

purpose of practical application in industry. Technology involves the development

of devices and machines from scientific knowledge already available. It involves a

lot of different techniques that help to reduce efforts for example washing machines,

smart phones, etc. Technology is something to which we adopt for our betterment

25

and allows people to do different things at the same time. Current technology is the

product of yesteryears innovation which has made life easier for the people.

Innovation mean means being creative or inventive in solving a problem. This

means the creation of new things, new methods, products, ideas or new ways of

doing things which was not known earlier on. Innovation is something unique, new

that has never been created or produced and will be released in the future so as to

help to reduce workload for the people.

SELF-ASSESSMENT EXERCISE

i. Identify the different phases of technology development

ii. Explain the following concepts: (a) Innovation (b) Invention

iii. Differentiate technology from innovation.

4.0 CONCLUSION

Technology is simply the way we do things as well as the means through which we

accomplish objectives. Innovation is something new such as new ideas, new methods,

products, etc. Technology and innovation should not be used interchangeably because

technology is an outcome of innovation of yesteryears. Innovation is a great idea, executed

brilliantly, and communicated in a way that is both intuitive and fully celebrates the magic

of the initial concept. Innovations create bigger opportunities and are critical for the

survival, economic growth, and success of a company.

5.0 SUMMARY

In this unit, we have discussed on the concept of technology and innovation. The term

technology comes from techno and logos. It covers the sum of knowledge about procedures

and processes not only in manufacturing but also in other spheres of social life and,

secondly, includes the procedures and processes. The unit also discussed types of

innovation such as incremental innovation, disruptive, architectural and radical innovation.

The unit also discussed the phases of technology development.

26

6.0 TUTOR-MARKED ASSIGNMENTS

i. Discuss the meanings of the following concepts: Technology; Innovation,

Invention.

ii. Justify the reason why technology should or should not be used interchangeably

with innovation.

iii. Highlight the different phases of technology development.

7.0 REFERENCES/FURTHER READINGS

Arthur, W. B. (2009). The Nature of Technology. New York: Free Press. p. 28.

ISBN 978- 1-4165-4405-0.

Beaney, M. (2014). Analysis (Stanford Encyclopedia of Philosophy). Available online:

http://plato.stanford.edu/entries/analysis/

Boylan, M., & Johnson, C. (2010). Philosophy: An innovative introduction: Fictive

narrative, primary texts and responsive writing. Boulder: Westview Press.

Grubler, A. (n.d). Technology and global change. International Institute for Applied

Systems Analysis Laxenburg, Austria

Shun, L. C. (2017). A comprehensive definition of technology from an Ethological

perspective. Social Sciences (ISSN 2076-0760).

27

UNIT 2 ECONOMIC GROWTH AND SOCIOECONOMIC DEVELOPMENT

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 What is Economic Growth?

3.1.1 Measurement of Economic Growth

3.2. What is Socio-Economic Development?

3.2.1 The Objectives of Socioeconomic Development

3.3 Components of Socioeconomic Development

3.4 Measurement of Socioeconomic Development

3.5 Economic Growth and Socioeconomic Development Compared

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Reading

1.0 INTRODUCTION

Economic growth is the sustainable increase in the total amount of the goods and services

(output) produced in an economy over time. Most times, economic growth is used as a

means of knowing how well a country is doing because more output means more trade,

more revenue and more consumption. It is an indication of how big an economy is growing,

but this does not show how better it is getting, hence development has been used as a better

measure. Socio-economic development is a sustainable increase in the total or average

outputs of all goods and services produced in a country, accompanied by desirable social

and institutional changes. This is to say that development is growth accompanied by certain

desirable changes. For any economy to develop, it has to experience sustainable growth

which is a necessary but not a sufficient condition. The desirable changes which lead to the

overall improvement in the living conditions of the citizens in a country are numerous and

they are the reasons why we can have growth without development. In this unit, we

examine the concept of economic growth and socio-economic development.

At the end of this unit, you will learn how to:

Define the concept of economic growth

28

Describe how economic growth is measured

State the advantages and disadvantages of economic growth.

Explain the components of socioeconomic development

Differentiate between economic growth and socioeconomic development.

3.0 MAIN CONTENT

3.1 What is Economic Growth?

The term economic growth has been variously defined. To an economist, economic growth

is a sustained increase in the national income (NI) or the total output of all goods and

services produced in an economy. It is an increase in the capacity of an economy to produce

goods and services, compared from one period of time to another. Economic growth

according to Todaro and Smith (2012) is the steady process by which the productive

capacity of the economy is increased over time to bring about rising levels of national

output and income.

Economic growth is a long-term rise in the capacity to supply increasingly diverse

economic goods to its population, this growing capacity based on advancing technology

and the institutional and ideological adjustments that it demands. This means that for an

economy to achieve growth there should be advancement in technology accompanied by

institutional and attitudinal adjustments.

Economic growth occurs whenever people take resources and efficiently rearrange them in

ways that make them more productive overtime. It is the continuous improvement in the

capacity to satisfy the demand for goods and services, resulting from increased production

scale, and improved productivity i.e. innovations in products and processes.

In summary, economic growth is an increase in the capacity of an economy to produce

goods and services, compared from one period of time to another. It can be measured in

nominal or real terms, the latter of which is adjusted for inflation. Traditionally, aggregate

economic growth is measured in terms of gross national Product (GNP) or gross domestic

product (GDP), although alternative metrics are sometimes used.

29

Economic growth is an important macroeconomic goal because it means there is more

material abundance brought about by efficient management of scarce resources. Growth

therefore lessens the burden of scarcity in any economy. The study of economic growth

provides learners with both theoretical and empirical understanding of how different

factors combine together to provide the right framework for a country's long run growth.

The study economic growth helps us to know how to use existing resources efficiently (by

avoiding costly waste) and invest in new ones.

Economic growth provides a necessary, although not sufficient condition for the

development of an economy - without growth, there will be no development. Therefore,

the study of growth is important to understand how a country can achieve development.

Since economic growth is largely about innovation, which is also the key to non-material

progress in such areas as the environment, health, and education, economic growth is not

just studied for the sake of output increase, but for a general progress in the economy.

SELF-ASSESSMENT EXERCISE

i. What do you understand by economic growth?

ii. Why is the study of economic growth important to an economy?

3.1.1 Measurement of Economic Growth

How do we know whether an economy is growing or not? The basic thing to do is to get

the sum total of all the goods and services produced within the economy in the current year

and compare it with that of the previous year.

The next question will then be - how can these products be summed up given the fact that

they come in different weights and dimensions? The solution to this is to sum up based

either on their market prices in the same currency or an indexing system which uses

percentage changes in physical outputs of the goods and services relative to a given base

year. In measuring economic growth, the most common method used is the Gross Domestic

Product (GDP) or its related indicators, such as Gross National Product (GNP) or Gross

30

National Income (GNI) which are derived from the GDP calculation. The GDP is defined

as the market value of the goods and services produced by a country, and it is calculated

from a country's national accounts which state annual data on incomes, expenditure and

investment for each sector of the economy.

There are three different ways of measuring GDP. They are: the income approach; the

value-added approach and the expenditure approach.

The income approach as the name implies measures people's incomes, the value-added

approach measures the total value added to the goods and services at each step of

production, and the expenditure approach measures the expenditure on goods and

services.

In theory, each of these approaches should lead to the same result, so if the output of the

economy increases, incomes and expenditures should increase by the same amount. The

problem here however, is that when using market prices to calculate GDP, inflation rates

should be considered especially for those countries that have high and persistence inflation

rates like the less developed countries.

3.1.2 Limitations of the Use of GDP to Measure Economic Growth

Despite the fact that the GDP is the most widely used means of measuring economic

growth, it has the following limitations:

1. Some cash transactions that take place outside of recorded market places are not included

in GDP statistics and as such the actual value of growth cannot be ascertained.

2. Goods and services produced but not exchanged for money, known as "nonmarket

production", are not measured, even though they have value. For example, if you paint

your house by yourself, instead of allowing a professional to paint it, the value of this

service will not be included in GDP.

3. In calculating the real GDP, the GDP deflator is used and since the GDP deflator is based

on estimates of inflation rates, it will be subject to statistical estimation errors.

4. The measure fails to take into consideration the changes in the growth of population. If

a rise in real growth rate is accompanied by a much faster rise in population growth, then

31

the per capita GDP (GDP divided by the number of people in the country) would be very

low and as such there will be no economic growth.

3.1.3 Advantages and Disadvantages of Economic Growth

Advantages of Economic Growth

1. Higher living standards - since growth means a sustainable increase in the total output

of goods and services produced in a country, consumers are able to enjoy more goods and

services, increased income and a general improvement in living standard.

2. Employment effects - growth stimulates more jobs in an economy and this would address

the issue of unemployment.

3. Lower government borrowing - economic growth boosts tax revenues and provides the

government with extra money to improve public services such as education and healthcare.

It helps to reduce government borrowing and makes it easier for a government to reduce

the size of their budget deficit.

4. Environmental protection - growth can also help provide the funds to protect the

environment such as low-carbon investment, innovation/research and development, in the

use of more efficient and environmental friendly production processes. Countries with

higher growth rates can afford the luxury of protecting the environment.

Disadvantages of Economic Growth

1. Working hours – sometimes there are fears that a fast-growing economy places

increasing demands on the hours that people work and can upset work-life balance.

2. Environmental issues - a fast growing economy can put pressure on the environment in

terms of depletion of the non-renewable natural resources, and damage caused by

industrial/economic activities on the environment e.g. air, water and noise pollutions.

3. Inequality- not all of the benefits of economic growth are evenly distributed. There could

be a rise in national output but also growing income and wealth inequality in the society.

There could also be regional differences in the distribution of rising income and spending.

32

4. Risk of inflation - if the economy grows too quickly, there is the danger of inflation as

spending would likely grow faster than production. This means that the demand races

ahead of the ability of the economy to supply goods and services. Producers then take

advantage of this by raising prices of their goods and services.

SELF-ASSESSMENT EXERCISE

i. List and explain the different methods of measuring economic growth.

ii. Discus why it is important to measure the growth of a nation.

3.2 What is Socioeconomic Development?

Socioeconomic development is made up of two words relating to social factors like

education and profession as well as economic factors such as income and resources.

Socioeconomic development is defined as the process of change or improvements in social

and economic conditions as they relate to individuals, organization or society as a whole.

It is measured with indicators, such as GDP, life expectancy, literacy and levels of

employment. Changes in less-tangible factors are also considered, such as personal dignity,

freedom of association, personal safety and freedom from fear of physical harm, and the

extent of participation in civil society. Causes of socioeconomic impacts are, for example,

new technologies, changes in laws, changes in the physical environment and ecological

changes.

3.2.1 The Objectives of Development

Development in all societies must have at least the following three objectives:

1. To increase the availability and widen the distribution of basic life-sustaining goods such

as food, shelter, and protection.

2. To raise level of living standard. This involves in addition to higher income, the

provision of more jobs, better education, and greater attention to cultural and human values,

all of which will serve not only to enhance material well-being but also to generate greater

individual and national self-esteem.

33

3. To expand the range of economic and social choices available to individuals and nations

by freeing them from servitude and the dependence not only in relation to other people and

nation-states but also to the forces of ignorance and human misery.

SELF-ASSESSMENT EXERCISE

i. Define socioeconomic development.

ii. What are the basic objectives of economic development?

3.3 Components of Socioeconomic Development

Socioeconomic development of any region or area depends on many factors or

components. Some of these components include:

i. Per Capita Income - Per capita income is widely accepted as a general measure of

development. It is customary to identify whether a region has been backward or

advanced in the levels of development using the estimates of per capita income. The

regions which enjoy higher per capita income are deemed to be more developed

than the states or regions with low per capita income. Generally per capita income

has been taken at current price. This variable or component is commonly used for

measuring economic development. Under-developed economies are distinguished

from the developed economies on the basis of their low per capita income.

ii. Level of Agricultural Development - Agricultural development is a pre-requisite

of economic growth in our country. Agriculture is important not only to meet the

ever growing and ever pressing demand for food and fibers for human consumption

but also for providing forage for animals, raw materials for non-agricultural sector,

employment opportunities to rural population and improves their standard of living.

Agriculture is the mainstay of almost all the states of the nation. According to an

UNESCO group of experts, agriculture can contribute to growth by increasing

efficiency of popular and releasing resources to other sector by adjusting the

consumption and of agricultural production in proportion with the growth in internal

and external demands.

34

iii. Level of Industrial Development - Industrialization is a key force of rapid

development of any economy. Most of the economists have accepted

industrialization as the most pre-dominant component of their development

strategies. Industrial units of organize sectors generally provide life blood to the

economic system by their leading role in transmitting growth impulses to the

surrounding area through their backward and forward linkages. Most of the

infrastructure facilities such as, means of transportation and communication, power

and banking expand along with industrial development, while, their availability in

the area causes concentration of industries. Industrialization not only provides

employment opportunities and reduces the dependence of workforce on agriculture

but also acts as an agent of socio-cultural transformation by bringing about

urbanization.

iv. Level of Urbanization - Urbanization means that an increasing proportion of

human society become towns folk, and as this happen towns grow in population,

spread in area, and make an ever increasing impact upon the countryside, both upon

its appearance and upon the life of its inhabitants. More and more of the landscape

becomes townscape and people come to live in an environment that is both

physically and socially urban.

v. Occupational Structure - The occupational structure of a region is known with the

distribution of its working population among different economic activities which

are most significant aspect of an economy. Occupational structure of a society is

one of the good indicators of social and economic inequality, because to a large

extent it determines the level of living. Study intended to understand the pattern of

disparity should, therefore, give due attention to this feature. In addition to providing

an insight into the nature of economy it also throws light on socio-economic,

cultural and political conditions of the society.

vi. Levels of Educational Development - Education is a crucial factor of social,

economic and cultural development. It provides economic opportunities and helps

to overcome social barriers. It also enhances earning potential and productivity of

35

people through acquisition of skill and information for various opportunities and

jobs. Educational achievement not only in the stepping stone to job opportunities

and hence earnings, but in the words of Horace Mann, education is beyond all other

devices of human origin, a great equalizer of the conditions of men, the balance

wheel of social machinery. Thus, the level of education determines the quality of

people and development of a region.

vii. Level of Health Status - The term 'health' has been defined in different ways by

scholars and organizations. In view of World Health Organisation (WHO), health is

a state of complete physical and mental well-being and not merely the absence of

disease or infirmity. It can also been seen as optimum capacity of an individual for

effective performance of the role and task for which he has been socialized. Thus,

health is a state of soundness of mind and body of an individual in which he is free

from any sort of disorder. The ultimate aim of all economic policies is to achieve a

healthy nation. A healthy nation can emerge only when there is adequate supply of

proper balanced food, when people are not undernourished or malnourished.

Poverty and health do not go together and hence in order to improve the health

standard it is imperative to eliminate poverty.

viii. Transport and Communication - Transport and communication is an essential

economic infrastructure for the rapid development of any region. In a planned

economy, location of industries, development of backward areas, decentralization

of economic activities, better distribution of products, better maintenance of law and

order, justice, defense and security all necessitate a proper system of transport and

communication. The modem concept of growth issues can meaningfully be

implemented only if there is proper transport network within a region.

ix. Population Structure - Population structure included population growth,

population density, age, sex, fertility, mortality etc. Population structure determines

the nature and magnitude of demand pressure on resources as well as the quantity

and quality of workforce to operate economic production mechanism. no regional

and socio-economic development plan can afford to neglect them but at its own risk.

36

Population structure is having great subjective significance in the fields of

Sociology, Demography and Economics. Presently, all governments irrespective of

their socioeconomic and political ideologies are undertaking regional planning to

optimize economic production and to minimize regional disparities in economic and

social development. Population structure and development are closely interrelated,

they both influences each other.

SELF-ASSESSMENT EXERCISE

i. Highlight the major determinants of socioeconomic development

3.4 Measurement of Economic Development

i). GNP and GNP per capita approach

These are termed income approaches because they aim at measuring productivity and

incomes of people over a period of time. The GNP approach measures the real national

income over a period of time. It considers the changes in a country’s total output of final

goods and services in real terms. The GNP per capita approach on the other hand is similar

to GNP measurement only, it takes into consideration the population factor and therefore

its measurement is based on what income an individual receives out of the entire available

income.

ii). Welfare Measure

In this method of measurement, economic development is viewed as a process whereby

there is an increase in the consumption of goods and services of individuals mainly as a

result of increase in income. This measurement looks at the increase in consumption of

individual in an economy but since consumption of goods and services is based on taste

and preferences of individuals, how can the weight of these outputs be measured when

preparing the welfare index of all the individuals? Again, it is not correct to say that with

the increase in national income, the economic welfare of the people might have improved.

ii). Social Indicators

37

Due to the inability of the above measures to capture in totality, the “desirable change”

aspect of development, some economists have tried to measure it in terms of social

indicators. Social indicators are usually referred to as the basic needs for development, and

these basic needs focus on alleviation of poverty by providing the basic human necessities

to the poor. Examples of the basic needs are food, clothes, healthcare, education, water,

sanitation and housing. The direct provision of these needs affects poverty in a faster and

cheaper way than the above strategies. The basic advantage of the social indicators is that

they are concerned with ends. Ends here are human development and the means to this end

is economic development.

However, different basic needs have their different indicators, but the problem with these

indicators is that there is no unanimity among economists as to the number and type of

items to be included in measuring development and this is a major limitation of this

method. For example, Hicks and Streeten (1979), considered six social indicators for basic

needs and they are:

1. Health as a basic need with life expectancy at birth as its indicator.

2. Education, as basic needs and indicator as the literacy taken as the primary school

enrolment as a percentage of population

3. Food as basic need with calories supply per head as indicator.

4. Water supply as basic needs and infant mortality and percentage of population with

access to portable water as the indicator.

5. Sanitation as a need and infant mortality and percentage of population with access to

sanitation.

6. Housing

One limitation of the social indicators method is that they are concerned with current

welfare and are not future related. Also, they involve value judgments. Therefore to avoid

this problem of value judgment and also for simplicity sake, economists and UN

organizations use GNP per capita as the measure of economic development.

38

Self-Assessment Exercise

i. How do we measure socioeconomic development?

3.5 Economic Growth and Socioeconomic Development Compared

Economic growth and socio-economic development are sometimes wrongly used

interchangeably. Below is a tabular representation of their differences.

Table 3.1. The Differences between Economic Growth and Socioeconomic

Development

Economic Growth Socioeconomic Development

Definition The sustained increase

in the aggregate output

or supply of goods and

services produced in a

country

Economic growth accompanied

by desirable economic, social and

institutional changes in an

economy.

Applicability/

Relevance

Growth theories are

associated with

developed countries.

Though widely used in

all countries of the

world. Economic

growth is a more

relevant measurement

for progress in

developed countries.

Socioeconomic development

theories are specific to the

developing countries because it is

more relevant to measuring

progress and quality of life in

developing nations.

Effect Quantitative: Brings

about quantitative

increase in the

economy

Qualitative and Quantitative:

Brings about qualitative and

quantitative changes in the

economy and society

Measurement Increase in GDP per

capita

Human Development Index

(HDI) which is a composite

statistics of the health, education,

and income indices.

SELF-ASSESSMENT EXERCISE

i. Identify the differences between economic growth and socioeconomic

development.

39

4.0 CONCLUSION

Economic growth as we stated at the beginning of this unit, is the increase in the total

amount of the goods and services (output) produced in an economy over time. Economic

growth brings about innovation, increases output, raises income, creates employment

opportunity and when this growth is sustained, the standard of living of the people will

improve. However, a rapid growth rate should be avoided because it could lead to several

problem among which is inflation. The knowledge of the concept of growth is very

important because it is through this knowledge that we are able to calculate the actual

growth rate of an economy and then know the necessary steps policy makers can take to

adjust growth rates to a desirable level.

5.0 SUMMARY

In this unit, the concepts of economic growth and socioeconomic development were

treated. From our discussions, we state clearly that though economic growth and

development are most often used synonymously, they are quite different, with economic

growth being a precondition for development. Socio-economic development is a

multidimensional process that goes beyond economic growth and involves the entire social

system. It is about the betterment of the human life and how this can be fulfilled and

sustained.

6.0 TUTOR-MARKED ASSIGNMENTS

i. What is the different between economic growth and socioeconomic development?

ii. Explain the determinants of socioeconomic development?

7.0 REFERENCES/FURTHER READING

Fashola, M. A. (2001). Macroeconomic theory highlights and policy extensions for less-

developed economies. (3rd ed.). Lagos: Concepts Publishers Ltd.

40

Hicks, N. & Streeten, P. (1979). Indicators of development: The search for a basic need

yardstick. World Development, 7(6), 568-580.

DOI:10.1016/0305-750X(79)90093-7

Jhingan, M. L. (2007). The economics of development and planning. (39th ed.). Delhi:

Vrinda Publications (P) Ltd.

Kuznets, S. (1973). Modern economic growth: Findings and reflections. The American

Economic Review, 63(3).

Metu, A. G. (2017). Economic growth and development. In U. R. Ezenekwe, K. O. Obi, M. C.

Uzonwanne & C. U. Kalu (Eds). Principles of economics II. (164 - 178). Nigeria:

Djompol Printers & Publishers.

Olajide, O. T. (2004). Theories of economic development and planning. Lagos: Pumark

Nigeria Ltd.

Romer, P. (2007). From the Concise Encyclopedia of Economics. D. R. Henderson,

(Ed.), Liberty Fund. www.ecolib.org/library/Enc /Economic Growth. Accessed

on 9/9/2013.

Todaro, M. P. & Smith, S. C. (2012). Economic development. 11th Edition. Boston:

United States of America. Pearson publishers

41

UNIT 3 DEVELOPED AND DEVELOPING ECONOMIES

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Meaning and Characteristics of a Developed Economy

3.2 Meaning and Characteristics of a Developing Economy

3.4 The Determinants of Socioeconomic Development

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

Development is the process of improving the quality of all human lives and capabilities by

raising people’s levels of living, self-esteem, and freedom. The path to development entails

how economies are transformed from stagnation to growth and from low income to high-

income status, and overcome problems of absolute poverty. We shall discuss the

characteristics of a developed economy and a developing economy to enable you

understand issues around socioeconomic development.

2.0 OBJECTIVES

At the end of this unit, it is expected that the students should be able to

Define developed and developing economies

Highlight the different characteristics of a developed economy and a developing

economy

Discus the determinants of socioeconomic development.

3.0 MAIN CONTENT

3.1 Meaning and Characteristics of a Developed Economy

Development of a country is measured by its overall economic stability, industrial

development, technological advancements, etc. A developed economy is defined as one

with relatively high level of economic growth, improved standard of living, enhanced

technological infrastructure and security (Metu et al, 2017). A developed economy, also

42

referred to as an industrialized country is characterized by low birth rate, higher life

expectancy, high level of literacy and a well trained workforce.

An economy’s level of development can be measured using the Human Development Index

(HDI), and living standards of the general population.

Fig 1: A Sample Picture of a Developed Country (Hong Kong)

Source: www.insidermonkey.com

3.1.1 The characteristics of a developed economy are:

There are several parameters used to determine the level of economic development of a

country and they include Human Development Index, income per capita, political stability,

industrialization, freedom and living standards of the general population, Gross national

Product (GNP), and Gross Domestic Product (GDP). Therefore, a country that has

43

performed so well in these areas referred to as developed country. The identified factors

are discuss as follows:

i. The Level of Human Development Index (HDI)

HDI is a measure developed by the UN to measure human development in a country and

the higher the HDI the more prosperous the country is. Unlike the GDP or GNP, which

give income and productivity only, HDI give how income is turned into human

development like education or health. For a developed country the literacy, education, and

health levels are high. When considering HDI, access to good health care and child

mortality rate at birth is considered while access to quality and free education, years spent

in school and ability to incorporate learned knowledge to real-life situations are considered.

In a developed nation, the rate of child mortality at birth is extremely low, and the education

is accessible to all. The HDI is always quantified and put on a scale between 0 and 1 with

most developed having a score above 0.8.

ii. The Level of Per Capita Income

This refers to the average amount of money a person receives within one year in a specific

region. It is calculated by dividing the total income in a specific country by the total

population of that country, and this value is always high in a developed country. High per

capita income signifies high economic and financial security for the general population of

that nation. The Gross Domestic Product (GDP) is also used to determine the per capita

value. GDP is the market value of the final product produced in a country for a particular

period mostly quarterly or yearly. If the GDP of a nation is high, then that state is more

developed.

iii. High rate of industrialization

For a developed country, the rate of industrialization and employment is high thus the

general population depends less on agriculture. Such a nation will have higher export than

imports hence the profits from the international trade will ensure that there is economic

44

growth hence increase in industrialization. The technological infrastructure of a developed

nation is also high due to the high level of industrialization.

iv. Political Stability

The index for measuring political stability was developed by World Bank and it is a

measure of the level of development of a country. Developed countries have stable political

environment, low or no corruption, and high level of respect to the country's laws. Good

Governance ensures that the level of corruption is low, transparency in running the

government is high, and employment is based on merit and qualifications. Recently The

Global Governance Indicator, a standardized scale being used to measure the political

stability of a developed nation.

v. High standard of living

The cost of living in a developed country is high compared to the less developed country,

and this is because the majority of the population is willing and has the financial ability to

afford quality goods and services which are expensive. Secondly, goods produced by local

industries are mostly consumed as opposed to imported products which might be inferior.

The general public has access to clean water and environment, affordable and quality

housing and access to other social and economic amenities in the country like access to

emergency services are fast.

vi. Freedom and Respect for the Rule of Law

A developed country has freedom for its citizens and respects the law. The freedom to

worship, marry, own property, and access to information characterizes a developed nation.

In the less developed countries, there are a lot of restrictions and citizens cannot do

whatever they like freely. Some of the developed countries are Australia, the United States

of America, Canada, Japan, Germany, and United Kingdom among others.

The other characteristic of a developed economy includes low income inequalities; low

level of unemployment; high rate of saving and capital accumulation; advancement in

45

technological adaptation; improved infrastructural facilities and they export largely

industrial services and products

Self-Assessment Exercise

i. What do you understand by a developed economy?

ii. Outline the characteristics of a developed economy.

3.2 Meaning and Characteristics of a Developing Economy

Similarly, a developing economy (less developed economy) is an economy with an

underdeveloped industrial base and a low human development index relative to other

developed countries. In most developing economies, rapid population growth is always a

threat to economic development. Some developing countries exhibit strong economic

growth and dynamics, while other countries stagnate.

Fig 2 : Picture of a Developing Economy (Nigeria)

Source: www.doc-research.org

46

The characteristics of a developing economy are:

i. Low level of GNI per capita: The Gross National Product (GNP) per capita or

Gross National Income (GNI) per capita is often considered to be a good index of

the economic welfare of the people in a country. The GNI per capita in developing

countries is very low. This low level of GNI per capita is sufficient to reflect the

plight of common people in these countries.

ii. Larger income inequalities: In developing countries apart from GNP per capita

being considerably lower, income inequalities are also larger than in developed

countries. Statistics from World Development Indicators overtime lends credence

to the view that income inequalities are far greater in developing countries than in

developed countries. According to Simon Kuznets, inequalities are much larger in

developing countries than developed countries.

iii. Widespread Poverty: The extent of absolute poverty is an important dimension of

the problem of income distribution in the developing countries. At relatively lower

levels of GNP per capita, large income inequalities exist in the developing countries.

This has also resulted in widespread poverty. China`s case lends confidence to the

view that in near future if developing countries wish to wipe out poverty they have

no choice but to improve the income distribution so as to ensure a minimum standard

of living, clothing, sanitation, health, education and so on.

iv. Low levels of Productivity: Labour productivity in developing countries is

invariably low. It is both a cause and effect of low levels of living in these countries.

Todaro and Smith affirm that “low levels of living and low productivity are self-

reinforcing social and economic phenomena in third World countries and as such

are the principal manifestations of and contributors to their underdevelopment”.

Labour productivity depends on a number of factors, particularly the availability of

other inputs to be combined with labour, health and skill of workers, motivation for

work and institutional flexibilities. Unfortunately, developing countries lack such

inputs.

47

v. Great dependence on agriculture with a backward industrial structure: Harvey

Leibenstein asserts that developing economies are basically agrarian in their

character. In these countries agriculture and allied activities generally account for

30% to 80% of the labour force. This is true of most of the Asian and African

countries. As compared to overall labour productivity, labour productivity in the

agricultural sector is lower in the developing countries than in the developed

countries. The industrial sector in the developing countries is both small and

backward while the extended industrial sector in these countries accounts for about

a fifth of the total product in these countries, less than 10% is allocable to

manufacturing proper.

vi. High levels of unemployment and underemployment: Unemployment in both

rural and urban areas is widespread in the developing countries. The traditional

agriculture characterized by outmoded techniques of production and low level of

productivity lacks labour absorption capacity. Thus, with rapidly growing

population in these countries, pressure of population on agricultural land has been

increasing and with it the problem of disguised unemployment is becoming

increasingly serious. In developing countries, markets for manufacturers are quite

small due to widespread poverty. Faced with the problems of lack of adequate

demand, industries grow at a snail pace and fail to provide jobs in sufficient number

to absorb the growing population.

vii. Technological Backwardness: In developing countries, production techniques are

inefficient over a wide range of industrial activity. This sorry state of affairs cannot

be explained in terms of one or two factors. Lack of research and development

(R&D), weak communication system between the research institutes and industries,

abundance of labour and capital scarcity are some obvious reasons for the use of

techniques which have otherwise become obsolete. Developing countries generally

do not have large effective institutions necessary for the discovery of appropriate

technology. Under this circumstance, an attempt is made to import technology from

developed countries which often fail to adapt to local conditions.

48

3.3 Determinants of Economic Development

i. Human Development Index (HDI): The Human Development Index (HDI)

measures achievements in three aspects of human development: health, education

and living standards. Unlike the GDP or GNP, which give income and productivity

only, HDI was introduced as an alternative to such conventional measures of

economic development. With the imperfect nature of economic wealth as a gauge

of human development, the HDI offers a powerful alternative to conventional

measures for measuring well-being and socio-economic progress. For a developed

country, the literacy, education, and health levels are high. When considering HDI,

access to good health care and child mortality rate at birth is considered while access

to quality and free education, years spent in school and ability to incorporate learned

knowledge to real-life situations are considered. In a developed nation, the rate of

child mortality at birth is extremely low, and the education is accessible to all.

ii. Income Per Capita: This refers to the average amount of money a person receives

within one year in a specific region. It is calculated by dividing the total income in

a specific country by the total population of that country, and this value is always

high in a developed country. High per capita income signifies high economic and

financial security for the general population of that nation. The Gross Domestic

Product (GDP) is also used to determine the per capita value. GDP is the market

value of the final product produced in a country for a particular period mostly

quarterly or yearly. If the GDP of a nation is high, then that state is more developed.

iii. Industrialization: In a developed country, the rate of industrialization and

employment is high. Thus, the general population depends less on agriculture. Such

a nation will have higher export than imports hence the profits from the international

trade will ensure that there is economic growth. The technological infrastructure of

a developed nation is also high due to the high level of industrialization.

iv. Political Stability: The index for measuring political stability was developed by

World Bank and it is a measure of the level of development of a country. Developed

countries have stable political environment, low or no corruption, and high level of

49

respect to the country's laws. Good Governance ensures that the level of corruption

is low, transparency in running the government is high, and employment is based

on merit and qualifications.

v. General Living Standards: The cost of living in a developed country is high

compared to the less developed country, and this is because the majority of the

population is willing and has the financial ability to afford quality goods and

services which are expensive. Secondly, goods produced by local industries are

mostly consumed as opposed to imported products which might be inferior. The

general public has access to clean water and environment, affordable and quality

housing and access to other social and economic amenities in the country like access

to emergency services are fast.

vi. Freedom: A developed country has freedom for its citizens and respects the law.

The freedom to worship, marry, own property, and access to information

characterizes a developed nation. In the less developed countries, there are a lot of

restrictions and citizens cannot do whatever they like freely.

Table 1: Classification of Countries according to Regions

Developed Economies by Region

Europe

North America European Union European Union Major developed

economies (G7)

Canada

United States

EU-15

Austria

Belgium

Denmark

Finland

France

Iceland

Norway

Switzerland

Canada

Japan

France

Germany

Italy

United Kingdom

50

Germany

Greece

Ireland

Italy

Luxembourg

Netherlands

Portugal

Spain

Sweden

United Kingdom

United States

Developed Asia

and Pacific

Australia

Japan

New Zealand

EU-13

Bulgaria

Croatia

Cyprus

Czech Republic

Estonia

Hungary

Latvia

Lithuania

Malta

Poland

Romania

Slovakia

Slovenia

51

Source: World Economic Situation and Prospects, (2019)

Developing Economies by Regions

Africa Asia Latin America

and the Caribbean

North Africa Southern Africa East Asia Caribbean

Algeria Angola Brunei Darussalam Bahamas

Egypt Botswana Cambodia Barbados

Libya Eswatini China Belize

Mauritania Lesotho Democratic People’s

Republic of Korea

Guyana

Morocco Malawi Fiji Jamaica

Sudan Mauritius Hong Kong SAR Suriname

Tunisia Mozambique Indonesia Trinidad and Tobago

Namibia Kiribati

South Africa Thailand

Zambia Malaysia

Zimbabwe Mongolia

Philippines

Republic of Korea

Samoa

Singapore

Solomon Islands

Taiwan Province of

China

52

Central Africa West Africa South Asia Mexico and Central

America

Cameroon Benin Afghanistan Costa Rica

Central African

Republic

Burkina Faso Bangladesh Cuba

Chad Cabo Verde Bhutan Dominican Republic

Congo Côte d’Ivoire India El Salvador

Equatorial Guinea Gambia Iran Guatemala

Gabon Ghana Maldives Haiti

Sao Tome and Prinicipe Guinea Nepal Honduras

Guinea-Bissau Pakistan Mexico

Liberia Sri Lanka Nicaragua

Mali Panama

Niger

Nigeria

Senegal

Sierra Leone

Togo

East Africa Western Asia South America

Burundi

Comoros

Democratic Republic of

the Congo

Djibouti

Eritrea

Bahrain

Iraq

Israel

Jordan

Kuwait

Argentina

Bolivia

Brazil

Chile

Colombia

53

Ethiopia

Kenya

Madagascar

Rwanda

Somalia

South Sudanc

Uganda

United Republic of

Tanzania

Lebanon

Oman

Qatar

Saudi Arabia

State of Palestinec

Syrian Arab Republic

Turkey

United Arab Emirates

Yemen

Ecuador

Paraguay

Peru

Uruguay

Venezuela

Source: World Economic Situation and Prospects, (2019)

SELF-ASSESSMENT EXERCISE

i. Explain a developing economy in your own understanding.

ii. Discuss the characteristics of a developing economy.

4.0 CONCLUSION

In this unit, we can conclude by saying that a developed economy is one enjoying

sustained economic growth and improved quality of life while a developing economy is

an economy with weak economic and development base. The determinants of

development includes level of income per capita, political stability, level of

industrialization and increase in general standard of living.

5.0 SUMMARY

In summary, this unit discussed extensively the concept of development in the context

of a developed and a developing economy. This unit also outlined the major

determinants of development which developing countries can strive to achieve in other

to be classified as a developed countries.

6.0 TUTOR-MARKED ASSIGNMENTS

54

i. Differentiate between a developed and a growing economy

ii. Describe the process of transition from a developing economy to a developed one

using the determinants of socioeconomic development.

iii. Categorise the different African countries according to their level of development.

7.0 REFERENCES/FURTHER READINGS

Metu, A. G. (2017). Economic growth and development. In U. R. Ezenekwe, K. O. Obi,

M. C. Uzonwanne & C. U. Kalu (Eds). Principles of economics II. (164 - 178).

Nigeria: Djompol Printers & Publishers.

Todaro, M. P. & Smith, S. C. (2012). Economic development. 11th Edition. USA:

Pearson Publishers.

UNDP, (2017). The real wealth of nations: Pathways to human development. Human

Development Report 2017.

UNIT 4: HISTORY OF TECHNOLOGY IN INDUSTRIAL DEVELOPMENT

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Industrial Revolutions and Technological Change

3.2 History of Technology Development in Nigeria

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

Technology and technological progress have played an important role in development of

human kind. This unit will evaluate the historical perspective of technology development

in major economies from two perspectives: One account will take into consideration

developments in terms of industrial revolutions. The second account involves historical

perspective of catch-up process among countries related to technological changes in

production process, in innovation and invention process, and developments that influenced

further increases of expenditures for science and technology.

4 OBJECTIVES

55

At the end of this unit, you should be able to:

Discuss the history of technological development

Trace the history of technological development from developed economies to the

developing economies

3.0 MAIN CONTENT

3.1 Industrial Revolutions and Technological Change.

Industrial Revolution marked the era when the society broke through from agrarian society

to industrial domination. The First Industrial Revolution is a product of the eighteenth

century. It encompasses variety of innovations, especially in the cotton industry of

England. It was the time of transformation from handicrafts to factory system of

production. The very important effect of the Industrial Revolution was that it was self-

sustainable, unlike the situation before the Revolution, where any improvement in

conditions and opportunities were dampened by the increase in population, thus keeping

income in the low level equilibrium trap (Malthusian trap). It is important to note that

technological advancement made it possible to escape from the Malthusian trap where

rising population matched or even outstripped growth in output, thus preventing any rise

in GDP per capita. At this point Britain was able to accommodate population growth of up

to 1.5 percent annually, unlike before 1700, where population growth above 0.5 caused

real wages to fall. At the same time Britain became the richest European economy. Second,

Britain went through a period of rapid structural change in employment. The change was

towards much urbanized and industrialized labour force than in any other relatively

advanced country (Crafts, 1998).

The common view of the industrial revolution is as a transition in which directions and

possibilities of economic life were transformed enabling dramatic demographic challenges

to be defeated over the long term. The changes involved here were complex and costs were

considerable, both in the long and short run. However, the progress depended on new

standards of economic efficiency, i.e. productivity growth. Attitudes, perceptions and

56

understanding of production methods and opportunities were central to the process

(Hoppit, 1990).

Although England was on the forefront of industrial revolution, other industrial nations in

Europe did not lag behind. In 1785, Britain was still leading, however, the lead over France

in the volume of output per capita from mines and manufactures was not as significant as

fifty years before. Situation with the use of machinery and large furnaces and prevalence

of large privately owned enterprises is much the same as for mines and manufactures in

1785 (Nef, 1943). It is obvious that the lead of Britain was not always progressing at the

same pace. Continental Europe followed the pace and narrowed the gap between the leader

and the followers. It seems that the rate of economic change in France during the most of

eighteenth century was not less remarkable as that of Britain.

Although the concentration of technology and technology change is mostly attributing to

the manufacturing industry, the technological change in agriculture was not unimportant.

The agricultural productivity in Britain in eighteenth century rose but not as much as in

industry. Historians even point out that mobility of labour and capital, essential to industrial

growth, were made possible due to social and economic improvements in agriculture. In

the countries industrializing today, especially in Asia, even though industrial sector has

increased production more rapidly than agriculture, output in agriculture has a steady rise

and incomes in the rural areas have improved as well. Successful land reforms in Korea

and Taiwan, unlike Latin American countries, were a very significant factor in the

subsequent growth and development performance (Freeman & Soete, 1997).

Mokyr (1990) argues that innovations associated with the industrial revolution should be

seen as “macroinventions”. It is suggested that these are unpredictable, exogenous shocks

that lead to advances in respective sectors. On the other hand, “microinventions” are

generated through subsequent improvement, adaptation, and diffusion of technology,

commonly involving learning by doing and learning by using. Much of the productivity

increases can be attributed to the later.

There are several possible factors that may have influenced low TFP growth (and R&D) in

the early nineteenth century Britain. Smallness of markets, weakness of science and formal

57

education, inadequacies of the patent system, the continued high rewards to rent seeking,

and the difficulties of securing compliant behaviour on the part of workers may have

contributed to the slowdown to a certain level. As far as the government is concerned, its

policy did not play an active role in correcting failures nor in any other way did it intervene

to correct market failures, compared to the successful government role in the Asian success

stories like Korea, and Taiwan. The policy had quite the opposite role. This was viewed in

the crowding out effect of public spending during the Napoleonic Wars.

Interestingly, the ongoing transformation of economies after the first industrial revolution

is labeled the second industrial revolution. Just as the first industrial revolution, the second

one is continuation of development started by the first revolution. As mentioned earlier,

these processes are more evolutionary than revolutionary. The innovation and inventions

have emerged, but diffusion of the same is a much slower process.

The beginning of the Second Industrial Revolution is labeled with several distinctions in

comparison to time before the revolution. These differences were given through three

different ideas. First, the accounting got an improved role. From mere record of past events

it developed into an applied science to help business decision-making. Secondly, engineers

applied the results of pure science in order to get higher safety and economy in the

construction of bridges and other works, and ships and boilers. The old methods, which

included the rule of thumb and trial and error, were substituted with precise calculations

and measurements. These new methods were of great importance in electrical engineering

and slowly spread through mechanical engineering. Thirdly, there was constantly

increasing competition among manufacturers and widening markets. The application of

scientific ideas for the workshop along with the cost accounting represented a birth of

scientific management.

There was an important shift here regarding the scientific methods. During the first

industrial revolution much of the innovations and inventions were based on trial and error

methodology, and on the rule of thumb. As economies and operations developed, this

methodology was not sufficient any longer.

58

Development of science introduced laboratories both in public and private domain. These

laboratories were either merely for testing materials, or for research. A very important

distinguishing characteristic of the second industrial revolution is the professionalizing

industry. Functions, e.g. administrative, technical and managerial, are clearly distinguished

along with the recognition of the qualification requirements for certain positions.

The exploitation of technologies associated with the Second Industrial Revolution

continues today. Major innovations and inventions (e.g. internal combustion engine,

electricity, etc.) are still in use today with some improved features. However, main

principles and ideas are the same. The "New Economy" associated with advances in

information and communication technology (ICT) is sometimes associated with

transference of economies from industrial to information societies. However, advances

made by using ICT are far from benefits associated with the two industrial revolutions and

hence could constitute the next industrial revolution.

SELF-ASSESSMENT EXERCISE

i. Trace the origin of technological development in industrial evolution

3.2 History of Technology Development in Nigeria

Nigeria is blessed with different ethnic groups each having their indigenously developed

usable technologies suitable for their own way of life and environment. Taking a look from

the coastal communities and the riverine areas down to the hinterlands, highland and the

Sahara desert, people have developed and put into use local technologies suitable for their

occupations, culture and transportation mode. However, it is not surprising to find that

despite these differences, the peoples have common technologies. For instance the hoes

and tools used on farms, the canoe water transportation, the palm wine tapping procedure,

the use of town crier or big drum as a means of communication, use of locally made bows,

guns and arrows as means of defence and hunting, etc.

Technological development in developing countries has always been part of human

existence though crude at the initial stage but has transformed into a celebrated

phenomenon in the present age. Technology has been involved in the way man perceive

59

his immediate environment, the means of livelihood especially in solving health care

issues, dissemination of information and retrieval system and how to defend himself

reveals the various levels of the scientific and technological approach to solving life’s

problems and challenges. Nigeria has no doubt played a worthy role in the various

technological discoveries which largely influenced the global world.

The body that officially directs technology drive in modern Nigeria is the Federal Ministry

of Science and Technology under the federal government and is saddled with the

responsibility of facilitating the development and deployment of innovations, science and

technology so as to enhance the pace of socio-economic development in Nigeria (Onipede,

2010). The Federal Ministry of science and technology was established on the 1st of

January, 1980 by act Number 1 of 1980, as the successor organ of government to the

National Science and Technology Development Agency (NSTDA), which was created in

1976. By January 1984, the ministry was merged with the Federal Ministry of Education

which was then renamed, Federal Ministry of Education, Science and Technology. But in

1992, the ministry was scrapped and all the parastatals and research institutes were shared

among other Ministries and Agencies such as the Federal Ministries of Industry,

Agriculture, Health and National Agency for Science and Engineering Infrastructure

(NASENI). The NASENI was established as an arm of government for the formation and

implementation of science and technology policies and this later led to the formation of the

Science and Technology Unit (STU). In 1993, the Federal Ministry of Science and

Technology was again re-established and the STU under the presidency became the

nucleus of the new Ministry. Consequently, some of its research institutes previously

transferred to other Ministries were returned to operate under its purview. The Ministry is

said to be currently supervising 17 Research and Development Institutions and interfacing

with other cognate bodies to diversify the economy.

SELF-ASSESSMENT EXERCISE

i. Discuss the history of technological development in Nigeria

4.0 CONCLUSION

From the historical viewpoint, we can observe that technological development in has

always been part of human existence. Technology has been involved in the way man

perceive his immediate environment. The crude at the initial stage has transformed into a

60

celebrated phenomenon in the present age. One of the components attributed to the fast

growth of both European countries and successful East Asian countries is social capability

due to technology evolution. Technology has evolved from different industrial revolutions.

5.0 SUMMARY

In summary, this unit discussed the historical evolution of technology from crude tools to

high technology thereby breaking the agrarian society. The First Industrial Revolution

started as early as the eighteenth century encompassing varieties of innovations, especially

in the cotton industry of England. It was the time of transformation from handicrafts to

factory system of production. The Second Industrial Revolution saw the development of

applied science to help business decision-making. In Nigeria technology development saw

the establishment of the National Science and Technology Development Agency

(NSTDA), in 1976; but presently called The Federal Ministry of Science and Technology.

6.0 TUTOR-MARKED ASSIGNMENTS

i. Explain the role of the different industrial revolutions in technology development.

ii. Trace the history of technology in the development of the Nigerian agricultural

sector.

7.0 REFERENCES/FURTHER READINGS

Berg, M. & Hudson, P. (1992). Rehabilitating the industrial revolution. The Economic

History Review, New Series, 45(1), 24-50.

Crafts, N. F. (1996). The first industrial revolution: A guided tour for growth economists,

The American Economic Review, 86(2), 197-201.

Freeman, C. & Soete, L. (1997). The economics of industrial innovation. Third edition.

Cambridge, Massachusetts MIT Press

Jevons, S. H. (1931). The second industrial revolution. The Economic Journal, 41(161), 1-

18.

61

Onipede, K. J. (2010). Technology development in Nigeria: The Nigerian machine tools

industry experience. Journal of Economics, 1(2), 85-90.

DOI: 10.1080/09765239.2010.11884927

MODULE TWO: NATURE OF TECHNOLOGICAL CHANGE AND

SOCIOECONOMIC IMPLICATIONS

UNIT 1 Technological Change and Technology Life Cycle

UNIT 2 Technological Change and Technical Progress

UNIT 3 Socioeconomic Implications of Technological Change

UNIT 4 Industrial Competition and Technological Change

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Technological Change and History: A Brief Introduction

3.2 Types of Technological Change

3.3 Technology Life Cycle

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

UNIT 1 TECHNOLOGICAL CHANGE AND TECHNOLOGY LIFE CYCLE

1.0 INTRODUCTION

Technological progress is at the heart of human progress and development. Technological

change is a loose concept that has multiple meanings. The concept originated from the

concerns about unemployment due to technology, in the 1930’s. It was subsequently

applied to the study of economic growth, namely productivity. Current technology is the

product of yesteryears innovation which has made life better for the people. Central to

62

understanding the role of technology is the recognition that technology and technological

progress are relevant to a wide range of economic activities. Therefore, there is the need to

study the role of technology in socioeconomic development of developing countries.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

Discuss the history of technological change

Highlight different types of technological change

Explain technology life cycle

3.0 MAIN CONTENT

3.1 Technological Change and History: A Brief Introduction

The concept of technology gave rise to two phrases such as: technological change and

technological innovation, but in this unit, we are concerned with the former. Technological

change is a phrase that emerged in the interwar years and that, by the 1950s, was “a modern

sounding term”, as a US Commission put it in 1960. A National Commission on

Technology, Automation and Economic Progress, whose members included sociologist

Daniel Bell and economist Robert Solow, was set up in December 1964 to study the effects

of technological change upon people. After a year, the commission submitted its report

titled Technology and the American Economy where it included a chapter titled

“technological change” to show the importance of the issue to America. The report is

massive, considering a series of contracted studies included as appendices. It deals entirely

with technological change and the belief that technological change is a major source of

unemployment. To the Commission, technology has, surely been a great blessing to

mankind. Over the years, technological change has been aligned to the fulfillment of human

purposes (National Commission on Technology, Automation and Economic Progress,

1966). To the Commission on Technology, Automation and Economic Progress,

technological change is “new methods of production, new designs of products and services,

and new products and new services.

63

3.1.1 Meaning of Technological Change and Technical Progress

Technological change is a very loose concept that has diverse meanings, depending on the

discipline. But, at the nature of all the different definitions is technological change as

technological “advance” or “improvement” or “progress”. These terms are often

alternative expression for technological change in the literature. According to Dewhurts,

technology change is a change of a firm’s ability to produce a given level of output with a

given quantity of inputs.

To economists, technological change has a more restricted meaning related to changes in

production techniques or methods of production (industrial processes). That is, changes in

techniques resulting from discoveries of new methods of production. The concept focuses

on industrial techniques as factors of economic growth or productivity. A change in

technique, in the wider sense of the term, as referring to changes in the methods of

production (Kaldor, 1932).

In operational terms, technological change is defined as change in productivity due to

changes in input (factors of production: capital and labor) used to produce output, or

substitution of machinery for labor. “Technological change is considered as synonymous

with modifications of [“a schedule which gives the outputs corresponding to different

factor inputs”], i.e. changes in the production function” (May, 1947). In other words

technological change is a shift in the production function (new combination of factors of

industrial production) – as contrasted to movement along the production function or mere

growth in the quantity of existing inputs to produce a given output.

Technological change is not all about improvement in the technical know-how. It means

much more than this. Technological change can be defined from three different dimensions

as:

(i) New technological inventions - Used to discuss the effects of new technologies

in form of tools, facilities, services, etc, on the society and culture (change) and

how the people adapt or adjust, to using new technologies.

64

(ii) New production techniques (industrial processes) - Used to study the role of

technology as a factor of economic growth (productivity)

(iii) Change in the production function - Used for measurement

Kennedy and Thirlwall, (1972), defines technology as useful knowledge pertaining to the

art of production while technical progress refers either to the effects of changes in

technology on the economic growth process, or to “changes in technology itself (technical

change). A few scholars make a difference between technical progress and technical

change, like Kennedy and Thirlwall do. But in general, both progress and change are used

interchangeably.

SELF-ASSESSMENT EXERCISE

i. Technological change and technological progress should not be used

interchangeably. Discuss

3.2 Types of Technological Change

i. Productivity: - These are tools that help people to produce more in an hour.

Example, accounting software that freed accounting departments from cumbersome

paper-based processes.

ii. Efficiency: - Technologies such as automation that allows firms to produce more

with a unit of input.

iii. Knowledge: - Tools that help people to create manage and share knowledge such as

internet.

iv. Industries: - Through technology we create new business models and dispute old

ones.

v. Environment: - Technology may create waste that harms ecosystems, the climate

system and quality of life. In theory, technology such as renewable energy can also

reduce some of this impact.

65

vi. Health: - Medicines, medical devices and other technologies that treat or prevent

diseases.

vii. Economics: - Technology creates economic shifts. Example automation may cause

short and long term disruptions to labor markets.

SELF-ASSESSMENT EXERCISE

i. Explain the different types of technological change

3.3 Technology Life cycle

Technology management involves carefully implementing the following 5 stages

Figure 3.1 Technology life cycle

i. The first phase of technology life cycle is that the company has a formal mechanism

to become aware of emerging technologies relevant to the need of the users or the

public.

ii. The second phase involves the actual acquisition of a particular technology. At this

stage, technical and economic feasibility study is conducted so as to decide whether

to acquire the technology or not

External &

internal

environment

Technology awareness of

marketable invention

Technology

acquisition by self

generation or transfer

Technology adoption

for specific needs

Technological

advancement involving

major modifications of

acquired technology

Technology

abandonment

obsolescence

66

iii. The third phase is the adaptation stage when the technology is eventually acquired

for its own particular needs.

iv. The fourth stage is driven by new innovations as a result of feedback gained in the

use of technology. It could be from creative ideas that comes from within.

v. The last phase of the technology life cycle is the abandonment phase. This is the

most critical because this is when technology decisions are made concerning the

obsolescence of a particular technology. Timing for the adoption of new

technologies can be done with input and information from R&D department,

production and marketing divisions.

SELF-ASSESSMENT EXERCISE

i. Discuss the 5 stages of technological life cycle.

4.0 CONCLUSION

In this unit, we may conclude that technological change is a phrase that emerged in the

interwar years and that, by the 1950s, it became a modern sounding term. Technological

change or technological progress is both used interchangeably because technical progress

is difficult to discuss in precise language. Technological change is defined with a wide

range of meanings and interpretations: inventions, production techniques, shifts in

production function. The uses of the concept oscillate between the large and the restricted,

from social (including economic) change due to technology, to change in technology.

5.0. SUMMARY

We discussed broadly on technological change, types of technological change and

technology life cycle. Technological change also known as technical progress is not all

about improvement in the technical know-how. It means much more than this. It involves

new technological inventions, that is, how new technology affects the society and how the

people adjust to using such new technologies. The types of technological change include

productivity, efficiency, knowledge, industries, environment, health and economics. For

effective management of technology, the following five crucial phases are of essence -

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creation of awareness, acquisition, adoption, advancement and abandonment. These phases

are referred to as technology life cycle.

6.0 TUTOR-MARKED ASSIGNMENT

i. What do you understand by technological change?

ii. There are different stages of technological life cycle. Use a diagram to illustrate

your explanation.

iii. Will technological change offer new opportunities for development in developing

countries?

7.0 REFERENCES/FURTHER READINGS

Godin, B. (2015). Technological change: What do technology and change stand for?

Project on the Intellectual History of Innovation Working Paper No. 24

Heeks, R. & Stanforth, C. (2015). Technological change in developing countries:

Opening the black box of process using actor-network theory. Development

Studies Research, 2(1), 33-50.

Niosi, J. (2008). Technology, development and innovation system. An Introduction

Journal of Development Studies, 44(3), 613-621.

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UNIT 2 TECHNOLOGICAL CHANGE AND TECHNICAL PROGRESS

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 The Production Function

3.2 The Role of Technological Progress in Economic Growth

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

Technological progress has many dimensions. It could mean larger quantities of output,

production of new and better products or the production of a larger variety of products.

Technological progress leads to increases in output for given amounts of capital and labor.

In this unit, we will discuss the production function and the relationship between technical

progress and growth.

2.0 OBJECTIVES

At the end of this unit, student should be able to:

2.1 Explain the production function

2.2 Understand the role of technical progress in achieving economic growth

3.0 MAIN CONTENT

3.1 The Production Function

Production function shows the relationship between the quantity of output and the different

quantities of inputs used in the production process (Alani, 2012). In other words, it means

the total output produced from the chosen quantity of various inputs. Therefore, it is a

technical relationship between inputs and outputs.

In the cause of technological progress, new inventions may result in the increase of the

efficiency of all methods of production. Equally, some techniques may become inefficient

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and obsolete and will not be useful in production anymore. These changes constitute

technological progress.

This technological progress can be shown in a diagram with an upward shift of the

production function or a downward movement of the production isoquant. Figure 1a shows

that the same output maybe produced by less factor inputs, while Figure 1b shows that

more output maybe obtained with the same inputs.

Figure 3a: Upward shift of the PP Figure 3b: Downward shift of the PP

Figure 3: Effect of Innovation in Production Process (PP)

Technical progress also changes the shape of the isoquant. According to Hicks, there are

three types of technical progress depending on its effect on the rate of substitution of the

factors of production.

(i) Capital-Deepening Technical Progress:

When the capital-labour (K/L) ratio is constant and the marginal rate of substitution of

labour for capital (MRSLK) increases, it is assumed that technical progress has capital-

deepening. The implication is that technical progress increases the marginal product of

capital by more than the marginal product of labor. Therefore, the ratio of marginal

products (MRSLK) decreases in absolute value. Since the slope of the isoquant is negative,

the technical progress in this case increases the MRSLK. The slope of the shifting isoquant

becomes less steep along any given radius as shown in figure 2.

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Figure 4: Capital deepening technical progress

(ii) Labour- Deepening Technical Progress:

A situation where along a radius through the origin with constant K/L ratio, the MRSL.K

increases, then we can say that the technical progress is labour-deepening. This means that

the technical progress increases the MPL faster than the MPK. Thus, MRSL.K which is the

ratio of the marginal products [(∂X/∂L)]/[ ∂X/∂K)], increases in absolute value (but

decreases if the minus is taken into consideration). The downwards-shifting isoquant

becomes steeper along any given radius through the origin as shown in figure 3

Figure 5: Labour-deepening technical progress

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(iii) Neutral-technical progress:

Technical progress is neutral if it increases the marginal product of both factors by the same

percentage, so that the MRSLK (along any radius) remains constant. The isoquant shifts

downwards parallel to itself (figure 4)

Figure 6: Neutral technical progress

SELF-ASSESSMENT EXERCISE

i. Explain the three stages of technical progress as outlined by Hicks

3.2. The Role Technological Progress in Economic Growth

Traditionally economists view the process by which goods and services are produced as

one that combines capital, labour, and other factors of production using a particular

technology. The relative efficiency with which an economy produces goods and services

with a given level of capital and labour is referred to total factor productivity (TFP) in other

words a measure of technical progress. But, the relationships between income growth,

technological progress, capital accumulation, and welfare are, of course, much more

complex than can be summarized in a simple measure of TFP, partly because each factor

of production and the technology with which factors are combined are dependent on one

another. Even though measures of TFP and its progress give us a sense of the relative

dispersion of technological progress, they tell us little about the mechanisms by which

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technology influences development. Technological progress involves much more than

doing the same things better or with fewer resources. It is more dynamic, involving both

the creation of new products and production techniques as well as the spread of these

techniques across firms and throughout the economy. Technological progress is beneficial

to developing countries, it can also be disruptive. While the mechanisms by which

technological progress contributes to socioeconomic development are in some sense

obvious, the following deserve special mention:

I. Technological progress in one sector can create new economic opportunities in

other sectors.

Lower production costs can create whole new products, or even sectors. A new-to-

the-market innovation in one sector can result in a flowering of activity in other

sectors by creating a demand for and supply of goods and services that did not exist

previously Success in one activity may well lead to further innovation and

technological deepening. The move from producing carnations to more fragile and

expensive roses is an example. Another example is the shift to higher-quality

products such as chilled rather than frozen fish fillets. Yet another example of

deepening is palm oil production in Indonesia, where new processes include the

production of new varieties of palms; the introduction of new crude and processed

palm oil refining technologies; and, notably, the introduction of oleo chemical

technologies.

II. The benefits of a new technology can extend well beyond the immediate sector in

which the technology exists.

This is the case if the initial product is an important intermediate good in the

production of other goods, for example, telecommunications or reliable electrical

service.

III. Technological progress can yield improvements in quality products.

Such improvements can enable a developing country to penetrate more demanding

consumer and intermediate markets. This can be as simple as employing machinery

and equipment that produce goods and services that correspond to the more exacting

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expectations and standards of consumers and business clients in high-income

countries. Technology in this sense extends beyond engineering technology to

include management techniques.

IV. Technological progress can spur development by lowering the costs of production

and enabling the exploitation of increasing returns to scale.

By improving the efficiency with which existing products are produced, new

technologies can open up the possibility of increasing output and, assuming that

markets are available, taking advantage of previously unexploited increasing returns

to scale.

V. The disruptive nature of technological progress.

The disruptive nature of technological progress can generate important benefits to

society by spurring competition. For example, the introduction of mobile phone

technology in several developing countries has introduced an important element of

competition not only in the telecommunications sector, but also in banking and other

information-sensitive sectors. Hence, many of the informational asymmetry

generated by lack of effective communications by middlemen used to exploit them

have been eliminated.

SELF-ASSESSMENT EXERCISE

i. Enumerate the role of technical progress in economic growth

4.0. CONCLUSION

In this unit, we can conclude that the production function is the technical relationship

between inputs and outputs. During technological progress, new inventions result in the

increase of the efficiency of all methods of production. Technological progress could be

capital deepening, labour deepening or neutral deepening. Technological progress can have

tangible and positive effects on economic growth and if well managed and utilized can lead

to socioeconomic development.

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5.0 SUMMARY

In our discussion, we understood that technological progress leads to increases in output

for a given amounts of capital and labour. It leads to the creation of economic opportunities

in other sectors. It can also result in improvements of product quality as well as reduction

in cost of goods and services. In addition, the disruptive nature of technological progress

generates benefits to the society by spurring industrial competition.

6.0 TUTOR-MARKED ASSIGNMENT

i. Discuss the role of technological progress in improving productivity.

ii. How can we determine economic growth of a country using total factor

productivity?

7.0 REFERENCES/FURTHER READINGS

Alani, J. (2012). Effects of technological progress and productivity on economic growth

in Uganda. Procedia Economics and Finance, 1, 14 – 23.

Nikoloski, K. (2016). Technology and economic development: Retrospective. Journal

of Process Management – New Technologies, International, 4(4)

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UNIT 3 SOCIOECONOMIC IMPLICATIONS OF TECHNOLOGICAL

CHANGE

CONTENTS

1.0. Introduction

2.0 Objectives

3.0 Main Content

3.1 Sustainable Socioeconomic Development

3.2 The Role of Technological Change in Socioeconomic Development

3.2.1 The Positive Role of Technology in Sustainable Socioeconomic

Development.

3.2.1 The Negative Role of Technology in Sustainable Socioeconomic

Development

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

The United Nations interest in new technologies is spurred by the opportunities of its ability

to address and monitor the ambitious Sustainable Development Goals (SDGs). The 2030

Agenda for Sustainable Development, adopted by world leaders in 2015, aims to “leave no

one behind” and therefore puts forward a broad and ambitious agenda for global action on

sustainable development. The (SDGs) require new modalities for development, including

bringing technology and innovation into the foreground of development strategies.

Science, technology and innovation (STI) which is SDG 9 (Build resilient infrastructure,

promote inclusive and sustainable industrialization and foster innovation), are key enablers

of most of the Goals. Therefore, harnessing new and existing technologies could be

transformative in achieving the SDGs and creating more prosperous, sustainable, healthy

and inclusive societies.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

Discuss what is meant by sustainable development

List the sustainable development goals

Explain the role of technology in socioeconomic development.

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3.0 MAIN CONTENT

3.1 Definition and Explanation of Sustainable Development

Sustainable development is defined as “development that meets the needs of the present

without compromising the ability of future generations to meet their own needs.” The

conception of needs is not just simply material needs, but it includes freedom to think,

freedom to act and participate, all amounting to sustainable living. In 1987 the United

Nations Commission on Environment and Development issued the Brundtland Report

which highlighted that environmental maintenance, equity and economic growth can be

achieved simultaneously with the enhancement of the resource base. It emphasized three

fundamental components of sustainable development: economic growth, environmental

protection and social equity.

Socioeconomic development is all about improving people’s welfare; hence human being

is the center of concerns for sustainable development. For socioeconomic development to

be sustainable, it must be both inclusive and environmentally sound to reduce poverty and

ensure prosperity for today’s population and to continue to meet the needs of future

generations. It is efficient with resources and when carefully planned to deliver both

immediate and long-term benefits for people, the planet, and prosperity.

Technological change is at the center of achieving the three pillars of sustainable

development. These pillars include economic growth, environmental stewardship, and

social inclusion across all sectors of development; from cities facing rapid urbanization to

agriculture, infrastructure, energy development and use, water availability, and

transportation. Technological change involves the use of the ICTs, internet, machine

learning, artificial intelligence, robotics, 3D printing, biotechnology, renewable energy

technologies, satellite, and drone technologies. These represent a significant opportunity to

achieve the 2030 Agenda for Sustainable Development and the Sustainable Development

Goals. Technological change could contribute to many, if not all of the goals, especially

those related to hunger, health, education, clean energy, industry, innovation and climate

change.

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3.2.1 Goals of Sustainability

The Sustainable Development Goals (SDG) grew out of the Millennium Development

Goals (MDG) that claimed success in reducing global poverty while acknowledging there

was still much more to do. The SDG eventually came up with a list of 17 points which are

the targets. Among others, this list includes the following:

• To end poverty and hunger

• To achieve better standards of education and healthcare, particularly as it pertains

to water quality and better sanitation

• To achieve gender equality

• To achieve sustainable economic growth while promoting jobs and stronger

economies

• For stainability to include health of the land, air, and sea

• To have sustainable consumption and production pattern

• Sustainable cities and communities

• Peaceful and strong institutions

• Partnership that will help in achieving the goals.

The Role of Technology in Socioeconomic Development

Technological change can contribute to socioeconomic development through the following

ways:

3.2.1 Positive Impacts of Technology on Socioeconomic Development

i. Ending poverty and monitoring the progress of poverty alleviation programmes: -

One of the goals of sustainable development is ending poverty in all its forms and

this requires not just income, but that, all peoples especially the poor and the

vulnerable, have equal rights to economic resources, as well as access to basic

services. Innovation and new technologies can contribute to the eradication of

poverty by raising living standards and contributing to economic diversification. For

example, renewable energy or solar technologies can be used to provide electricity

in rural areas while internet can be used to detect water contamination as well as in

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purify the water. Also, machine learning and ICT can also be used to create

measures, develop and monitor the effectiveness of anti-poverty programs and

progress towards the Sustainable Development Goals. Models based on both mobile

phone activity and airtime credit purchases have been shown to estimate multi-

dimensional poverty indicators accurately (UNCTAD, 2016).

ii. Improvement in education: - New digital platforms, including open online courses,

allow for open access and participation through the World Wide Web. The online

technology do not just involve online video lectures but also incorporates social

sharing features, interactive quizzes and assignments, supplementary resources (e.g.

books, articles), community teaching assistants, etc. Technology has the potential

of providing self-paced learning, lower cost quality teaching as well as good content

and methods. Open hardware and software platforms have the potential to enhance

the educational experience in developing countries. For instance 3D printing is

being used as a tool for education in primary, secondary, and post-secondary schools

in developed countries.

iii. Improving agricultural production and food security: - It is estimated that about 795

million people are undernourished, with the majority living in developing countries

and rural areas. With new and existing technologies, the issue of food insecurity can

be addressed. There are basically four dimensions of food security, namely, food

availability, access, use and stability. The use of irrigation technologies,

improvement of soil fertility and use of genetic modification, can help to increase

food availability in developing countries. The issue of food accessibility can be

solved using postharvest and agro-processing technologies, while the use of early

warning systems can reduce the problem of instability in food supply.

iv. New technologies such as machine learning, is being used to detect soil and crop

quality. For instance in Nigeria, the use of technology has helped in building

financial resilience to weather and climate changes that negatively affect the

incomes of agricultural workers.

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v. Technology helps to promote access to and efficiency of energy: - Access to

electricity plays a critical role in improving livelihood, facilitating new productive

and income-generating activities in an economy. The development of decentralized

renewable energy systems can provide electricity in developing countries. Solar

energy is presently used as an alternative means of generating energy in many parts

of the world. Energy demand can also be managed with the use of big data

technologies. Smart grids can increase energy distribution and production by

allowing households with solar panels on their roofs to feed surplus energy back

into the electricity grid. The real-time information provided by smart grids help

utility companies to respond to demand for power supply, costs, and emissions as

well as avert major power outages. For instance, Zenatix, a Delhi company, deploys

smart meters and temperature sensors to monitor energy meters and help households

and offices reduce energy consumption through message-based alerts. The

transition from fossil fuels to renewable energy could be a catalyst for industrial

development and structural change if backed by finance and investment, technology

transfer and other supportive measures to ensure adequate energy supply at

reasonable costs. Though such a transition requires overcoming important

technological, economic, financial and governance obstacles in developing

countries.

vi. Enabling economic diversification and transformation, productivity and

competitiveness: - For countries with requisite technological capabilities,

technologies may support structural transformation, improve living standards,

increase productivity and reduce production costs and prices. New technologies,

including artificial intelligence, have the potential to promote new sources of

employment and income and access new opportunities that were previously out of

reach. New frontier technologies provide opportunities for technological

advancement needed to restructure their economies. For example, a few countries

such as the Republic of Korea and Taiwan have achieved rapid economic growth

by advancing in some specific technology sectors such as electronic goods.

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Technologies, including artificial intelligence, have the potential to promote new

sources of employment and income and access new markets and opportunities

previously out of reach.

vii. Promote social inclusion: - New technologies enable large segments of populations

in developing countries to innovate, coordinate, and collaborate. Grass-roots

innovation facilitates the involvement of different networks such as academics,

activists and practitioners experimenting with alternative forms of knowledge-

creation and innovation processes. For example, a fabrication laboratory established

by the University of Nairobi has used 3D printing to develop a sanitation solution

for slums and a vein-finder device to help administer injections in infants. New

platforms provide innovative ways to coordinate by distributing work, building two-

sided markets for the sharing economy, and providing personalized digital learning

within and outside established educational institutions. Digitally-enabled open and

collaborative innovation enables knowledge and technology to be produced across

a multiplicity of actors and institutions, drawing from a large pool from both formal

and informal knowledge.

viii. Improving the health status of individuals: - Technologies could address health

challenges by distributing interventions, monitoring and assessing health-related

indicators, and developing gene editing techniques. Countries are increasingly using

geographic information systems and unmanned aerial systems to better connect

citizens with existing health systems. For example, during a typhoid outbreak in

Uganda, the Ministry of Health used data-mapping applications to allocate medicine

and mobilize health teams. For instance, in Rwanda, the government partnered with

a robotics company, known as Zipline, to address maternal mortality by using

drones to deliver blood to medical facilities thereby reducing the time needed to

procure blood from four hours to fifteen minutes. New technologies hold promise

for making public health interventions more effective by using big data and digital

simulations for forecasting. Advances in biotechnology allows for specific gene

editing for human medicine and personalized treatments.

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3.2.2 Negative Impacts of Technology on Socioeconomic Development

While digital platforms may create opportunities for socioeconomic development in

developing countries, digitalization may also present certain development challenges as

identified:

i. Automation and future jobs: - The application of new technologies provides an

opportunity to address the development goals, but, they can disrupt economic

development, thereby posing new challenges for policy makers and the society at

large. Automation from the convergence of artificial intelligence, machine learning,

and big data could impact employment, productivity, globalization, and competition

in unclear and potentially negative ways. While technologies can be expected to

create new jobs and opportunities, it also has the potential to disrupt existing labour

markets and productive sectors. For example, the World Bank estimates, that two-

thirds of all jobs could be susceptible to automation in developing countries in

coming decades (UNCTAD, 2019). The impacts of automation varies according to

a range of factors such as the levels of industrialization and development, skills and

capacities, labour costs, technological capabilities, infrastructure and policies

encouraging or discouraging automation. Although jobs in developing economies

tend to be less exposed to automation, developed and developing countries have

started to converge in this regard in the last decades. Consequently, automation can

have important impacts on the economies of developing countries in the future.

Recently, new technologies have been substituting workers only in specific tasks,

but they have not replaced entire occupations. Rather than eliminating occupations,

technology changes how jobs are performed, and the number of humans needed to

carry them out.

ii. Widen Income Inequalities: - Despite the new opportunities for trade and

development, dynamics could lead to widening income inequalities and increased

polarization. The evolving digital connectivity has also been accompanied by online

labour platforms that provide those with required skills new income-generating

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activities for people in developing countries. But there is fear that oversupply of job

seekers online could reduce bargaining power and low wage rate.

SELF-ASSESSMENT EXERCISE

i. Enumerate the positive implications of technology change

ii. Discuss the negative role of technology in socioeconomic development of

developing countries.

4.0 CONCLUSION

Technological change offers a significant opportunity to achieving the 2030 Sustainable

Development Goals. Sustainable development is development that meets the needs of the

present generation without compromising that of the future. New and emerging

technologies have many advantages to the developing countries, though, it also poses new

challenges for policy-making, threatening to outpace the capacity of governments and

society to adapt to the changes that new technologies bring about. Automation could impact

employment, productivity, globalization, and competition in unclear and potentially

negative ways. Therefore, harnessing new technologies could be transformative in

achieving the SDGs and creating more prosperous, sustainable, healthy and inclusive

societies.

5.0 SUMMARY

Sustainable development is defined as the development that meet the needs of the present

generation without compromising the needs of the future generations. It affords the future

generation the same opportunity to prosper as the present generation. We know that

development comes with higher material welfare by increasing national output of goods

and services on one hand and on the other hand it pollutes the environment badly by

overuse and misuse of natural resources. Hence the need for environmental protection.

Technological change represents a significant opportunity to achieve the 2030 Agenda for

Sustainable Development and the Sustainable Development Goals. Rapid technological

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change could contribute to support poverty eradication efforts, improve food security,

promote energy access and efficiency, enable structural economic transformation, support

social inclusion, combat disease, and enable access to quality education.

6.0 TUTOR-MARKED ASSIGNMENT

i. Discuss the role of new and existing technology in achieving the 2030 Sustainable

Development Goals in Nigeria.

7.0 REFERENCES/FURTHER READINGS

UNCTAD, (2019). Issue papers on the impact of rapid technological change on

sustainable development. Prepared for the 2018-2019 Inter-sessional Panel of the

United Nations Commission on Science and Technology for Development’

https://unctad.org/meetings/en/SessionalDocuments/ecn162019d2_en.pdf

Shah, M. M. (2008). Sustainable Development. Encyclopedia of Ecology.

https://www.sciencedirect.com/topics/earth-and-planetary-sciences/sustainable-

development/pdf

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UNIT 4 INDUSTRIAL COMPETITIONS AND TECHNOLOGY CHANGE

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Industrial Competition

3.1.1 Competitive Parity

3.1.2 Competitive Advantage

3.2 Competition Policy and Economic Growth

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

Competition is the process of winning business in a crowded market. It makes production

more efficient, cheaper and of better quality. Without competition, economic and

technological progress or change will be slow or may not exist especially in developing

nations. Technological change (TC) is the overall process of innovation, invention and

diffusion of technology or processes. It derives from three major sources which are

summarized as Research and Development (R&D), learning-by-doing and spillovers.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

understand the meaning of industrial competition

know the components of industrial competition

3.0 MAIN CONTENT

3.1 Industrial Competition

Businesses that sell similar products or services are always competing with each other. For

instance, if your business is education technology, your competitors are other businesses

creating education tech apps. Industry competition is so fierce that companies have to fight

for the business of potential customers. This could lead to a negative view about

competition. The state of industry competition can have a major influence on strategy even

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though competition has some negative implications. A product might be unique but it does

not mean that there are no competitors for such product. As its growing, new competitors

will definitely emerge. A competitive matrix can be a helpful tool for thinking through who

your competitors are and how your product or service is different from theirs. There are

five basic forces (Porter’s Five Forces) that drive competition in an industry: Industry

rivalry, threat of new entrants, bargaining power of customers, bargaining power of

suppliers and threat of substitutes. They are:

i. Industry Rivalry - Industry rivalry describes a case of competitors within an

industry jockeying for position, using tactics such as product launches, advertising

competition, and price competition. When business owners feel competitive

pressure or see an opportunity to improve their current position, rivalry can become

intense. Sometimes it can even lead to industry disruption. The transportation

industry in Nigeria is an example of industry rivalry.

ii. Threat of New Entrants - New industry players are always a threat to existing

businesses. The seriousness of the threat, however, will depend on barriers to entry

and the reaction from current competitors in the marketplace. If barriers to entry are

low (example, if it costs little to enter the industry or if there are few economies of

scale in place), new entrants can weaken the existing businesses’ position in the

market.

iii. Bargaining Power of Customers - Customers can affect the pricing. Prices are

affected by how many customers purchase a product or service, how significant each

customer is to a company and the cost to a customer of switching from one business

to another. If a company has a limited but powerful client base purchasing its

product, they can often dictate their terms and drive prices down.

iv. Bargaining Power of Suppliers - If customers can drive prices down, suppliers can

drive prices up. This force is driven by the number of suppliers, the uniqueness of

the supplier’s product, and how much it would cost a company to switch from one

supplier to another. If a company has few suppliers, it becomes dependent on them

and the suppliers in turn will have the power to increase their prices.

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v. Threat of Substitutes - The demand for substitutes can reduce the demand for

industry products and services. If a company increases its prices, customers are

more likely to switch to cheaper alternatives. This can significantly reduce a

company’s power within the industry.

3.1.1 Competitive Parity

Competitive parity is the optimal expenditure on branding and advertising activities

required for a firm to stay at par with the competitors of a particular brand, product.

Promotional budget is allocated based on the scrutiny of optimal level of market

competition. The war between Coca Cola and Pepsi is an example of such competition.

The respective firms will first check their competitor’s presence in any new place they want

to establish their presence. Accordingly, they budget their advertising and promotional

expenses. Businesses use competitive parity as a defensive strategy to maintain their

reputation, brand and position without necessarily overspending on their financial

resources.

One of the merits of using this method to calculate the advertising and branding

expenditure is that a business will not be too far away from competitors in the sense that

their spending and visibility will be at par.

Another advantage is that it is more simplified than using sales forecast and demand

forecast to determine what they will spend on branding and advertisement in the future.

Though this can vary from one company to another depending on the situation on ground.

For a company that is not doing so well financially, this kind of advertising and branding

budgeting may not augur well for them.

For new entrants into the market, this kind of budgeting is not always advised unless the

market in itself is very new and still in its emerging stages in which case it makes sense as

all the competitors are relatively new too. Hence; they will have to bear huge opportunity

costs in order to match up to the budgets of existing firms in terms of advertising and

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branding. Similarly, for products that are different in nature, it is not worth spending

exorbitantly on branding and advertising.

Two companies might have products that are competitors but they may also have products

that are not competitive. A look at the advertising behavior of certain competitors shows a

fierce competition existing between them, including matching their spending on

advertising and branding. This kind of competing behavior exists between Flipkart,

Amazon and Snap deal.

3.1.2 Competitive Advantage

Competitive advantage is the superiority gained by an organization/firm when it can

provide the same value as its competitors but at a lower price, or can charge higher prices

by providing greater value through differentiation. In other words, Competitive advantage

is the leverage a business has over its competitors. It is also an attribute that allows a firm

to outperform its competitors by offering consumers greater value, either by means of

lower prices or by providing greater benefits and service that justifies higher prices. Other

competitive advantage strategies innovators use to outdo their competitors are:

i. Brand: Brand loyalty is one of the biggest competitive advantages any business can

capitalize on. An effective brand image and positioning strategy leads to customers

becoming loyal to the brand and even paying more than usual to own the brand’s

product. Apple is a perfect example when it comes to brand-related competitive

advantage.

ii. Financial advantage: Some companies enter the market with huge funding and

disrupt the system by providing some really enticing offers or providing the

products at really low prices. This acts as a competitive advantage as other

companies often fail to respond to such tactics.

iii. Barriers to Entry & Competition: Businesses often make use of natural and

artificial barriers to entry like government policies, access to suppliers, patents,

trademarks, etc. to stop others from becoming a close competitor.

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SELF-ASSESSMENT EXERCISE

i. Discuss the term industrial competition

ii. Explain the strategies used by innovators to achieve competitive advantage

3.2 Competition Policy and Economic Growth

Competition tends to align private and social objectives. Given enough competition and

the absence of externalities, markets should produce socially efficient outcomes, because

firms that do not serve their customers efficiently will lose out to those that do. On the

other hand, competition can reduce or even destroy long-run economic growth. This is

because, in many cases, the main reward to a successful innovator comes in the form of

monopoly rents that a firm captures by learning how to supply something its competitors

cannot, or at a cost competitors cannot match. Increased competition, however, reduces a

firm’s ability to capture monopoly rents and discourages the innovations that trigger long-

run growth. Indeed, this is what the first generation of Schumpeterian growth models

predicted. Product market competition is good for growth because it forces firms to

innovate in order to survive. Also, competition from a new technology drives

improvements in previously developed technologies.

The Schumpeterian theory contains a variety of channels through which competition might,

in fact, spur economic growth. One of these channels is by creating barriers to entry which

raises the cost of introducing a new technology to the outside firm. Invariably, this reduces

both the incentive to perform R&D and the growth rate. Let us consider next the role of

agency costs that allow managers to operate businesses in their own interests rather than

maximizing the owners’ profits. To the extent an increase in competition reduces the firm’s

flow of profits, it reduces the scope for managerial slack and forces managers to innovate

more often.

Competition stimulates innovation by depriving managers of the opportunity to enjoy a

quiet life. For firms that are already producing and earning profits, the incentive to innovate

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is lower, since innovations would affect existing profits. Despite this effect, incumbent

firms might engage in at least some R&D if there were decreasing returns to R&D effort

at the firm level. An increase in the intensity of competition tends to reduce the absolute

level of profits a successful innovator realizes. It equally tends to reduce the profits of an

unsuccessful innovator. Therefore, competition can have a positive overall effect on the

rate of innovation, because firms will try to innovate in order to escape competition.

Another channel through which increased competition can stimulate economic growth is

described in a model of fundamental and secondary innovations created by Aghion and

Howitt (1996). The fundamental research is the basic research that generates the underlying

ideas leading to new products. Meanwhile, secondary research is applied research or

development that helps in the realization of the potential created by the fundamental

research. In the Aghion and Howitt model, society faces a tradeoff between engaging in

basic research or engaging in applied developmental research. Most times the output of

fundamental research is more difficult for a private firm to appropriate because it is

underprovided in the absence of government support to the extent that existing research is

reallocated from secondary (applied) toward fundamental (basic) research. And an increase

in the intensity of competition indeed leads to such a reallocation. That is, when new

products can compete more freely with existing ones, someone who makes a basic

innovation can attract developers more easily, which raises the returns to the basic

innovation. Thus, more competition raises the rate of economic growth by encouraging a

reallocation toward more fundamental research. To the extent competition policy

authorities, regulators, or trade liberalizers might have shrunk from promoting competition

for fear that innovation-promoting profits might erode, the new growth theory suggests

they should take a more aggressive stand in favour of more competitive markets.

SELF-ASSESSMENT EXERCISE

i. Discuss the importance industrial competition in driving economic growth

4.0 CONCLUSION

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In this unit we can conclude that competition is necessary for economic and technological

progress or change in developing nations. While technology refers to the processes used

by a firm to transform inputs into output, technological change is a change of a firm’s

ability to produce a given level of output with a given quantity of inputs. We are presently

in an environment where technology is advancing and globalization is increasing rapidly.

The implication is that distances are getting shorter, which results to increase in

competition, customer expectations being high, and occurrence of disruptions in the

economy. Competition is a struggle and whose survivors are businesses that succeed in

creating, adopting, and improving new technologies. For a business or an organization to

realize competitive advantages, it should be able to adapt to the changing trends and new

generations.

5.0 SUMMARY

This unit discussed extensively industrial competition and technology change. There are

five basic forces that drive competition in an industry: Industry rivalry, threat of new

entrants, bargaining power of customers, bargaining power of suppliers and threat of

substitutes. Competitive advantage is the control a business has over its competitors by

offering consumers greater value, lower prices and providing benefits and service attractive

to the customers. The Schumpeterian theory advocates that by creating barriers to entry as

a channel through which competition might, in fact, spur economic growth.

6.0 TUTOR-MARKED ASSIGNMENTS

i. Discuss in detail the basic types of industrial competition.

ii. As a business manager, how can you have competitive advantage over your

competitors?

7.0 REFERENCES/FURTHER READINGS

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Clayton M. C. (2003). The innovator’s solution: Creating and sustaining successful

growth. https://www.goodreads.com>show>2618

Scott D. A., Mark J., Sinfield, J. V. & Altman, J. E. (2008). The Innovator’s guide to

growth: Putting disruptive innovation to work.

http//www.hbr.org>product>8460-HBK-ENG

Moore, A. G. (n.d). Crossing the chasm: Marketing and selling disruptive products to

mainstream customers.

Howitt, P. (2007). Innovation, competition and growth: A Schumpeterian perspective on

canada’s cconomy. C. D. Howe Institute Commentary

https://web.archive.org/web/20110717090449/http://www.cdhowe.org/pdf/commentary_

246.pdf

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MODULE THREE: TECHNOLOGY TRANSFER, DIFFUSSION AND

ADOPTION

UNIT 1 Technology Transfer and Socioeconomic Development

UNIT 2 Technology Diffusion and Adoption

UNIT 3 Economic Theories of Technological change

UNIT 4 Issues of Technology Acquisition in Developing Countries

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Definition and Explanation of Technology Transfer

3.2 Classification of Technology Transfer

3.3 Approaches to Technology Transfer Process

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

UNIT 1 TECHNOLOGY TRANSFER AND SOCIOECONOMIC

DEVELOPMENT

1.0 INTRODUCTION

It is expected that the student must have been familiarized with the explanations of

technology change. This unit explains the meaning of technological transfer as well as the

different categories of technology transfer.

Technology transfer is a process by which various elements of technology are transferred

from one individual or group to another for meeting the needs of business or society.

Technology transfer is effected through different channels of contact hence the need to

highlight and discuss the approaches to technological transfer in this unit. This will give

the student a background knowledge and understanding of subsequent units.

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2.0 OBJECTIVES

At the end of this unit, you should be able to:

Discus the meaning of technology transfer

Explain the different classes of technology transfer

Enumerate the different approaches through which technology can be transferred.

3.0 MAIN CONTENT

3.1. Definition and Explanation of Technological Transfer

Technology developments are happening around the world and this new developments

must be explored and adopted by those who developed them or acquired by those who need

them. Technology can be acquired in two ways; either it is developed through research and

development (R&D) or it is purchased by the person or country that needs it. Therefore, it

is this second way of acquiring technology that is commonly referred to as ‘Technology

Transfer.’ This is a process which is very crucial for the wide utilization, application and

up-gradating of already developed technology.

According to Rani, Rao, Ramarao and Kumar (2018) technology transfer is the process of

transferring scientific findings, knowledge, manufacturing process, etc., from one

organization to another for the purpose of developing them further as well as for

commercial purposes. Technology transfer enables the flow of technology from one source

to another (receiver). The holder or owner of the knowledge is called the source while the

beneficiary of such technology is the recipient

Technology transfer is a process by which various elements of technology are transferred

from one individual or group to another for meeting the needs of the society.

SELF-ASSESSMENT EXERCISE

i. Discuss the meaning of technological transfer

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3.2. Classification of technological transfer

Technological transfer involves providing technology developed from one user to another

user and it can be categorised differently as listed below:

(i) International technology transfer is when technology is transferred across

national boundaries. For instance, technology can be transferred from

industrialised nations or economies to developing or emerging economies.

(ii) Regional technology transfer is when technology is transferred from one

region of the country to another. For instance, from one state to another state

within the same country.

(iii) Cross sector technology transfer (across industry) is when technology is

transferred from one industrial sector to another. For instance, technology is

transferred from agricultural activity to commercial activity.

(iv) Inter-firm technology transfer is when technology is transferred from one

firm to another. For instance, the transfer of computer-aided manufacturing

(CAM) machines is being transferred from a machine tool manufacturing

firm to a furniture producing firm.

(v) Intra-firm technology transfer is when technology is transferred within a firm

from one location to another. For instance, when technology from a particular

company or firm in Abuja is transferred to another subsidiary in Suleja. It

could also be from one department to another department that is within the

same facility.

3.3 Stages of Technology Transfer Process

The transfer of technologies between countries especially from mostly developed

countries to developing countries follows five different stages namely:

(i) The first stage includes sales and licensing agreements which covers all

forms of industrial property such as patents, industrial design, trademarks,

investors’ certificates, service names and trade names, etc.

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(ii) The second stage is the provision of technical expertise in the form of

feasibility studies, diagrams, instructions, training, etc.

(iii) The third stage is the provision of basic engineering designs, installations and

operations of acquired plants.

(iv) The fourth stage involves leases and acquiring of machinery, intermediate

goods (raw materials) and equipment.

(v) The fifth stage involves industrial and technical cooperation agreements of

any kind, international sub-contracting and provision of management and

marketing services.

SELF-ASSESSMENT EXERCISE

i. Illustrate the stages through which technology can be transferred from a source to

the receiver

3.4 Technology flow Channels to Developing Countries

Technology can flow easily across countries, industries, departments or individuals so long

as there are established channels of flow. The two channels through which technologies

can flow from the source to the receiver are informal and the formal flows.

3.4.1 Informal Flows of technological Transfer are:

i. General channels: - This is when technology is unintentionally transferred and may

continue without the direct and continued involvement of the source. This could be

in form of tourism, education, conferences and workshops, training as well as even

publications.

ii. Reverse engineering: - This is when technology is transferred without going through

the usual technology transfer process. It is mostly adopted by agencies and is the

fastest route for duplicating an existing technology.

3.4.2 Formal Flows of Technological Transfer are:

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This refers to the intentional transfer of technology from source to the receiver. It is also

referred to as ‘planned channels’ because they follow a planned process so as to get the

consent of the owner of the technology. The owner under different agreements then permits

access to the receiver or user of the technology and they include:

i. Foreign direct investment (FDI) is where a multinational corporation decides to

invest or produce its products overseas. This idea permits the transfer of technology

to another country though the technology is still controlled by the firm. This type of

investment becomes mutually beneficial to both the host economy and the investor.

First, the host country gets technological knowhow, employment opportunities as

well as training for the work force and investment capital that adds to the

development of its infrastructure. The investor on the other hand gains access to

natural resources, labour force, and markets for their products.

ii. Turn-key project is where a country (receiver) purchases a whole project from

another country (source) and the project is designed, delivered and implemented

ready to operate and use. There may be special provisions for training or continued

operational support but that will be determined by both parties. This may be

equivalent to selling or buying the machine.

iii. Technical consortium on joint R&D project is where a country joins another country

or more countries as a large venture, to affect the direction of technological change

due to inadequate resources. Typically this type of venture takes place between two

or more countries or two large conglomerates. All these cooperative projects aim to

advance research, develop technology and transfer of knowledge to participating

member states. Here, the entities combine their interests, share knowledge and

resources to develop a technology or a product or use their know-how to

complement one another.

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iv. Licensing is when the receiver purchases the rights to utilize someone else’s

technology. It may involve a complete purchase or a payment of an initial lump-

sum amount plus a percentage of sales.

v. Franchise is a form of licensing where the sources usually provides some type of

continuous support to the receiver. This is a channel commonly used in developing

countries by the industrialised nations when heavy technology is transferred. A few

countries have encouraged joint ventures rather than FDI to maximize technology

transfers to local firms. However, this strategy seems to work only for countries

with substantial market power. In particular, fear of losing control over cutting-edge

technologies sometimes causes multinational firms to be forced into joint ventures

to reserve their best technologies for the domestic market and transfer only older

less efficient ones.

SELF-ASSESSMENT EXERCISE

i. Identify the different flows of technological transfer.

ii. Explain the formal flows of technology transfer from source to the receiver.

4.0 CONCLUSION

From our discussion so far, we can deduce the following facts:

• That technology created in a particular economy can be transferred from its source

to another source which is the receiver.

• That most times the developed countries are the sources of technology while the

developing countries are the receivers.

• That technological transfer can be categorized into international technology

transfer or domestic technology transfer involving regions, across sectors, inter

firm and intra firm technology transfer.

• That the idea of transferring technology from the source to the receiver is a

continuous process involving different stages.

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5.0 SUMMARY

In this unit, we discussed what is meant by technological transfer. We also identified the

different categorisations of technological transfer. Technology transfer is not a one-off

thing rather it continuously flows across regions, countries, companies, firms and

departments within organisations and among individuals. Stages of technology transfer

includes sales and licensing agreements, provision of technical expertise, provision of basic

engineering designs, leasing of the technology and reaching of technical and industrial

cooperation agreement between the source and the receivers. It is assumed that an

understanding of this unit prepares the students for the next unit where technological

diffusion and adoption will be discussed.

6.0 TUTOR-MARKED ASSIGNMENT

i. Identify and Discuss the various technology transfer processes prevailing in

Nigeria and the world

7.0 REFERENCES/FURTHER READINGS

Rani, S. S., Rao, B. M., Ramarao, P., & Kumar, S. (2018). Technology Transfer - Models

and Mechanisms. International Journal of Mechanical Engineering and Technology

(IJMET), 9(6), pp. 971–982.

http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=9&IType=6

Malik, K. (2002). Aiding the technology manager: A conceptual model for intra-firm

technology transfer. Technovation, 22(7), 427-436.

Purushotham H., Sridhar, V., & Shyam Sunder, C. H. (2013). Management of

technology transfer from Indian publicly funded R&D institutions to industry-

modeling of factors impacting successful technology transfer. International

Journal of Innovation, Management and Technology, 4(4), 422-428.

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UNIT 2 TECHNOLOGY DIFFUSION AND ADOPTION

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Definition and Explanation of Technology Diffusion and Adoption

3.2 Drivers of Technology Diffusion and Adoption

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

In the previous unit, we discussed technological transfer. In this unit, we will highlight

issues on technological diffusion and adoption. The efficient diffusion of knowledge on

new technologies is an essential characteristics of growth and development. New

knowledge has no economic value until it has been used productively. This means that the

more widely a particular bit of knowledge can be used, the greater its value becomes.

2.0 OBJECTIVES

At the end of this unit, student should be able to:

Explain what is meant by technology diffusion and adoption

Discuss the different drivers of technology diffusion and adoption.

3.0. MAIN CONTENT

3.1) Definition and Explanation of Technology Diffusion and Adoption

Diffusion is the spread of knowledge from an original source or sources to one or more

recipients. Technology diffusion does not follow a single uniform pattern. The process of

diffusion tends to last the longest in the innovation center, that is, region of origin. Regions

where diffusion begins later tends to have a quicker diffusion process as they “catch up”

with the center of origin. The extent of diffusion within a region, the adoption level, tends

to be highest in the innovation center. Diffusion times are shorter in the “catch-up” regions

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and adoption levels are generally also lower. For instance, countries where automobiles

and railways were first introduced, took nearly 100 years to reach maturity. Late adopters

began several decades later, but diffusion took only a few decades instead of an entire

century. The timing of diffusion also sets the pace for pervasive technological change, i.e.,

the emergence of the sort of technology clusters that determine global change. Important

technology clusters needed several decades to develop initially, and about half a century to

reach maturity in the innovation centers and to diffuse at the international level. Altogether,

the overall temporal envelope of any particular technology cluster spans up to a century,

with its main growth period covering about five decades.

3.2) Drivers of Technology Diffusion and Adoption

The achievement of technological progress in developing countries can be attributed to the

ability of the economy to absorb and adapt pre-existing and new technologies, rather than

to the invention of entirely new technologies. Given that technology gap exist in

developing countries, this situation is likely bound to continue.

A developing country’s ability to absorb and adopt foreign technologies depends on two

main factors:

The extent to which it is exposed to foreign technologies (the pace at which

technologies diffuse across countries) and

The ability to absorb and adapt those technologies to which it is exposed (the pace

at which technology diffuses within the country).

The identified channels through which developing countries are exposed to foreign

technologies so as to translate to technological achievements are:

a. International Trade - Trade is one of the most important mechanisms by which

embodied technological knowledge (in the form of both capital and intermediate

goods and services) is transferred across countries. Imports of technologically

sophisticated goods help developing countries raise the quality of products as well

as the efficiency with which they are produced. Countries can also absorb new

technology by exporting to customers who provide guidance in meeting the

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specifications required for access to global markets. For developing countries with

low R&D intensity, trade openness and exposure to foreign competition provide

powerful inducements to adopt more advanced technology in both exporting and

import-competing firms and are likely to produce large technology spillovers and

productivity gains (Schiff & Wang 2006).The dismantling of trade barriers in many

developing countries increased developing countries’ exposure to foreign

technologies.

Participation in high-tech export markets has also been identified as a channel

through which technology is diffused within developing countries. Exporting firms

in developing countries benefit from technological transfers that occur as a result of

their interactions with foreign buyers who may have higher quality standards than

domestic buyers. These foreign buyers may also assist with information, process

improvements and experience with foreign markets.

It should be noted that the extent to which imported technology boosts domestic

technological activity either directly or indirectly depends on the quality of a

country’s technological absorptive capacity. Also, the business climate may be too

weak or the technological literacy of the local labor force may be too low to

successfully adapt the machinery to local conditions. The country may not realize

the potential productivity improvements available from imported technology.

b. Foreign Direct Investment (FDI) - Like trade, FDI can be a powerful channel for the

transmission of technology to developing countries by financing new investment in

machinery and equipment purchases, by communicating information about

technology to domestic affiliates of foreign firms, and by facilitating the diffusion

of technology to local firms. Foreign Direct Investment (FDI) includes mergers and

acquisitions that may involve no additional physical investment, and the share of

mergers and acquisitions, including privatization transactions. Foreign firms may

also improve the technological capacity of developing countries by financing R&D.

Foreign direct investment (FDI) may also affect the level of technology in domestic

firms. Spillovers can arise when workers receive training or accumulate experience

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working for multinationals and then move to domestic firms or set up their own

enterprise. In addition, foreign investors may provide advice, designs, direct

production assistance, or marketing contacts to suppliers, which the latter can then

deploy more broadly than simply providing cheaper or more reliable inputs to the

foreigners.

The entry of multinationals is likely to increase competition for the domestic firms

within the industry, potentially forcing them to improve their efficiency and

introduce new technologies or business strategies (Blomstrom, Kokko, & Zejan

2000). Such competition can make surviving domestic competitors stronger, but

other domestic firms may be driven out of business, lose market share, and

experience a loss of high-skilled workers and higher costs for intermediate goods

resulting from increasing demand from the foreign-owned firms. These effects may

vary by industry depending on factors such as the market structure before the entry

of foreign multinationals, the R&D intensity of the products, and the links between

foreign firms and domestic firms in upstream and downstream sectors.

FDI is a major source of process technology and learning by doing opportunities for

individuals in developing countries. In addition to dismantling barriers to foreign

investment, some middle-income countries have encouraged greater FDI flows by

implementing stronger regimes governing intellectual property rights.

c. International Migration - Substantial technology transfers are also associated with

international migration of developing countries where the direction of technology

transfer can be both outward (as migrants take away scarce skills) and inward

(through contacts with the diaspora). Though not all of these are positive. The

direction and scale of technology flows that result from international migration is

not as clear as that of FDI and trade. Developing countries can benefit from the

immigration of managers and engineers that often accompanies FDI, they can also

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benefit from the technologically sophistication of the returns of well-educated

developing country emigrants.

High rates of skilled out-migration imply a net transfer of human capital and scarce

resources (in the form of the cost of educating these workers) from low- to high-

income countries. Most university-educated individuals from developing countries,

these days do not return to or remain in their country of origin, leading to the

problem of brain-drain. The issue of brain drain is a serious problem for a number

of mostly small countries because the better educated citizens of developing

countries working in high-income countries contribute to that economy. On the

other hand, the contribution that these individuals would have made had they stayed

home is uncertain given the lack of opportunities in their home countries.

However, the existence of a well-educated diaspora constitutes an important

technological resource for the home country. For most countries, high-skilled

outmigration remains at manageable levels and these knowledgeable Diasporas

contribute to technology transfers by strengthening trade and investment linkages

with more advanced economies through networks that provide access to technology,

capital and through remittances. Remittances not only contribute to domestic

entrepreneurship and investment, but also, along with the introduction of mobile

phone services, have greatly expanded the provision of banking and other financial

services within developing countries. Finally, returning migrants can provide

important resources, such as entrepreneurship, technology, marketing knowledge,

and investment capital. The effect of a single returning émigré armed with skills

acquired in a developed economy can have (and has had) large economic and

technological effects on the country of origin.

d. Direct Government Policy: - Good governance and business environment should

focus on strengthening the infrastructure necessary for the successful diffusion and

implementation of technologies, on facilitating the diffusion of already existing

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technologies, and on developing domestic competencies. Developing countries in

most cases do not have blueprint for technological progress, but most success stories

have involved strong central leadership to ensure a consistent and effective policy

framework that supports the development and commercialization of innovations.

e. Financing and Supporting Innovative Firms: - Developing is filled with more of

informal sectors where technological progress is largely implemented by the private

firms. However, progress at the firm level requires government support in form of

an appropriate incentives framework, including overall political and economic

stability and government transparency, along with specific technology policies such

as protection of intellectual property rights; investments in human capital, including

general education and technical training where firms underinvest in training because

of the potential mobility of trained staff; support for R&D of new-to-the-market

technologies because of difficulties in appropriating the full benefits from such

efforts; and, where appropriate, government interventions to overcome market

failures involving coordination, threshold effects, and agglomeration effects. Most

technological success stories of countries such as Germany, Japan before and after

World War II, the East Asian miracle countries, Chile, Ireland, and Israel have

involved strong national leadership and a coherent strategy for promoting

technology.

f. Basic Technological Literacy: - The capacity of firms or individuals to use a

technology depends critically on the basic technological literacy as well as

availability of skilled labour. The level of technological literacy, depends on the

government’s capacity to provide qualitative education health, and publicly-

provided infrastructure; in the procurement of goods and services; in the provision

of information for the people.

SELF-ASSESSMENT EXERCISE

105

i. Enumerate succinctly the drivers of technology diffusion and adoption in

developing countries.

4.0 CONCLUSION

In this unit, our emphasis is on technology diffusion and adoption, i.e., the widespread

adoption of technologies over time, in space, and between different social strata.

Understanding technology diffusion is very crucial because it is through diffusion that

technologies exert noticeable impact on output and productivity growth, on socioeconomic

development, and on the environment. Without diffusion, a new technology may be a

triumph of human ingenuity, but it will not be an agent of global change. Technology

diffusion in developing countries depends both on access to foreign technology (through

trade, FDI, international migration, and other networks). The most important determinants

of the absorptive capacity are the governance variables, human capital variables, financial

intermediation and good macroeconomic environment.

5.0 SUMMARY

Openness to external technologies through foreign trade, FDI, migration and other

international networks is critical for technological progress of developing economies.

Among developing economies, most progress occurs through the adoption, adaptation, and

assimilation of pre-existing and new technologies. The preeminent vehicles for the

dissemination and diffusion of technology in a market economy are the entrepreneurs

whose success depends on their ability to undertake risk. Successful entrepreneurship

requires a stable macroeconomic environment, together with a regulatory environment.

The government can also have an important impact on economic progress by integrating

new technologies into its own operations.

6.0 TUTOR-MARKED ASSIGNMENTS

i. What do you understand by the concept of technology transfer?

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ii. Discuss the various technology transfer processes prevailing in Nigeria and the

world.

iii. How can the government encourage technology absorption in Nigeria?

7.0 REFERENCES/FURTHER READINGS

Akubue, A. (2000). Appropriate technology for socioeconomic development in Third

world countries. The Journal of Technology Studies, 26(1), 33-43

https://www.jstor.org/stable/43604562

Rani, S. S., Rao, B. M., Ramaro, P., & Kumar, S. (2018). Technology transfer- Models

and Mechanism. International Journal of Mechanical engineering and

Technology, 9(6), 971-982

http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=9&IType=6

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UNIT 3 ECONOMIC THEORIES OF TECHNOLOGY CHANGE

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Main Content

3.1 Exogenous growth theory

3.2 Endogenous growth theory

3.3 Theory of creative destruction

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignment

7.0 References/Further Readings

1.0 INTRODUCTION

Traditional economists have viewed the relationship between technology and the economy

as a one-way street. According to the neoclassical growth model of Solow (1956) and Swan

(1956), shows how an economy reaches a steady state through the accumulation of capital.

The steady state is where capital investment in each period is equal to depreciation.

According to the endogenous growth theory technological change has a profound influence

on our well-being indeed, the economy’s long-run growth rate is determined exclusively

by the rate of technological progress.

2.0 OBJECTIVES

At the end of this unit, you should be able to:

explain the exogenous growth theory

describe the endogenous growth theory

discuss the theory of creative destruction

3.0 MAIN CONTENT

3.1 Exogenous Growth Theory

The initial neoclassical theory was developed by Solow in 1956 and then augmented by

other scholars. According to the theory, sustained economic growth occurs through an

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exogenous factor of production, that is, the passage of time. It is represented by the Cobb

Douglas production function which relates output to factor inputs (stock of accumulated

physical capital and labour). The theory imposes decreasing returns with respect to the use

of each (reproducible) factor of production (and constant returns overall). The assumption

shows that an increase in the stock of capital goods will result in a less than proportionate

increase in output, if labour remains constant. Eventually more capital stock will produce

no more output, resulting in lower profits and low output.

The neoclassical model states that in the long term, the growth rate of output per worker is

dependent on the rate of labour-augmenting improvement in technology, which is

determined by exogenous factor(s) not contained in the model. The model implies that all

economies using similar technology will eventually converge to a stead state of growth.

Though Solow remarked that “the steady state is not a bad place for the theory of growth

to start, but may be a dangerous place for it to end”.

The Cobb-Douglas production function also known as the neoclassical production

function, is expressed as follows:

Y = 𝐿𝛼𝐾𝛽 𝑇 where 𝛼 + 𝛽 = 1 (1)

where: Y= output; L= labour; K= capital; T= time or the rate of technological progress

which changes over time. The weights 𝛼 𝑎𝑛𝑑 𝛽 represent the proportion of Y that accrues

to labour (L) and capital (K) respectively.

A simple Solow model depicts the output, Y, of a business, as a function of three variables:

capital, K, labour, L, and knowledge, 𝐴𝑡

Y = 𝐾𝛼(𝐴𝑡L) 1−𝛼 0 < 𝛼 < 1 (2)

Knowledge or technical progress is assumed to be independent of both the capital and

labour inputs and to be a nonrival good, which is free for all businesses. It appears

multiplicatively with labour in (1), denoting that knowledge contributes by “augmenting”

labour and not affecting capital. The exponents 𝛼 and 1 − 𝛼 measure the relative

contribution of the two inputs of capital and “effective labour”. These exponents add to

unity, to comply with the constant-returns-to-scale assumption for production.

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According to Solow, the differences in productivity levels may be caused by faster/slower

population growth or a higher/lower savings rate, while lower productivity could be due to

climate deficiencies or other factors not accounted for in the model.

This model has two important features which recent growth theories have challenged:

• If people were to save a constant proportion of their income, capital per effective worker

would be constant in the long run, so that k' = 0 and per capita income growth is therefore

entirely determined by knowledge growth, α.

• Increasing the savings (i.e. investment) ratio could raise an economy's income level

(permanently) by raising the growth rate of capital (and income) in the short run, but since

the ratio of savings to income cannot continue to increase indefinitely, investment cannot

cause income to grow permanently. Countries that invest more would be wealthier but

would not grow faster since the only source of long-term growth is technical progress (or

“knowledge accumulation”), which is assumed to occur at an exogenous rate. According

to this model, income growth rates are beyond business and government control, but, real-

life experiences point to the contrary.

SELF-ASSESSMENT EXERCISE

i. Explain the exogenous growth theory

3.2 Endogenous Growth Theory

The endogenous growth theory which was developed by Romer (1986) and Lucas (1988),

shows that conventional economics can be used to analyze the two-way relationship

between technology and economics as well as the feedback effect from the economy to

technological change. Technological progress is another form of capital accumulation

because it consists of the accumulation of knowledge, in form of intellectual capital, much

like physical or human capital. Technological knowledge, like other forms of capital, can

be accumulated with the expenditure of current economic resources (R&D expenditures)

and can be used to augment future production possibilities. In this theory, technological

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progress, like capital accumulation, arises from decisions to save. Some saving goes to

finance the accumulation of physical and human capital, and some goes to finance the R&D

that causes technological knowledge to accumulate. Thus, if the society saves a larger part

of their national income, it leads to economic growth through increase of technological

progress.

The new growth theory brought the endogenous technological change into the mainstream

of economics and revived interest in long-term economic growth as an objective of

economic policy. The old theory presented a negative view of what economic policy could

do in this regard, arguing that, in the long run, economic growth is limited by progress in

physics, biology, and engineering, rather than by economic forces. But the new growth

theory says that an economy’s long-run growth rate depends on people’s willingness to

save, which is very much affected by economic policy. Moreover, standard cost-benefit

analysis shows that a policy that produces even a tiny increase in long-term economic

growth can generate benefits whose discounted present value are enormous

In the traditional endogenous growth theory, economic growth is likened to a private

activity where economies can save to become richer just like private individuals. This

simple theory will guide the developing countries in analyzing government policies that

will affect national saving even though it ignores a critical social aspect of the growth

process by being viewed as something that will raise everyone’s standard of living.

This new theory emphasizes the distinction between technological knowledge and capital,

and analyzes the process of technological innovation as a separate activity from saving.

The new wave is explicit about who gains from technological progress, who loses, how the

gains and losses depend on social arrangements, and how such arrangements affect

society’s willingness and ability to create and cope with technological change.

SELF-ASSESSMENT EXERCISE

i. Describe the endogenous growth theory.

The Theory of Creative Destruction

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One aspect of the endogenous growth theory was developed by Schumpeter, a development

economist. The theory is called the theory of creative destruction because it involves a

situation where each innovation produces new technological knowledge that improves our

material possibilities and renders obsolete some of the technological knowledge that were

originally created by previous innovations. Schumpeterian theory analyzes the process of

technological innovation as being separate from saving. It highlights the difference

between capital and technological knowledge. It sees economic growth as a social process

bound up with institutions, policies, social customs, and many other phenomena that affect

not only the incentive to save but also the incentive to create new knowledge and the

willingness to adapt to change.

The theory of creative destruction holds that it is innovation rather price that determines

firms competition (Howett, 2007). It explains that the gains and losses of technological

progress depend on social arrangements, and how such arrangements affect society’s

ability to create and cope with technological change. By this, the theory offers a new

perspective on a number of important economic issues that interact with economic growth.

Technically, a model of growth through creative destruction can be seen in terms of two

long run relationships, that is, between the rate of economic growth (the growth rate of

GDP per worker) and the amount of capital per efficiency unit of labour (efficiency units

is measured by hours worked multiplied by productivity). An increase in the saving rate

would resulting in a higher steady-state capital stock per efficiency unit for any given long-

run growth rate. A higher rate of growth would imply a faster rate of technological

progress, and hence a faster-growing labour force measured in efficiency units. The

economy-wide level of R&D determines the flow of innovations, which, in turn, governs

the rate of technological progress and, therefore, the long-run rate of economic growth.

Given the constant institutional and policy variables, an increase in the steady-state capital

stock per efficiency unit of labour raises the incentive to perform R&D through a “scale

effect.” That is, more capital per worker results in more production per worker, and hence

more income per person, for any given level of technology (see Howitt and Aghion 1998).

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And when people have larger incomes, they spend more on newly invented products, which

raises the incentive to perform R&D, and results in a faster rate of economic growth.

Likewise, any changes in institutions, policies, or other variables that affect the incentive

to perform R&D results in different rates of R&D and of long-run growth for any given

capital stock per effective worker. According to this theory, the long-run growth rate is

determined by strengthening the incentive to perform R&D and raising the economy’s

propensity to save.

SELF-ASSESSMENT EXERCISE

i. What do you understand by the theory of creative destruction?

4.0 CONCLUSION

In this unit we may conclude that the new theory leads to several broad conclusions that

are relevant for current policy debates. Also relevant is the fact that competition policy

should not be relaxed in the hope of boosting innovation. This is because more competition

actually strengthens the incentive to innovate. Any economy that engages in R&D

increases the flow of innovations in the economy, which, in turn, governs the rate of

technological progress and, therefore, the long-run rate of economic growth.

5.0 SUMMARY

The mainstream growth theory believes that technological progress in the form of new

products, new ideas, new markets and new techniques due not emanate from the scientific

laboratory but come from discoveries made by private profit-seeking business enterprises.

The new growth theories such as endogenous growth theory posit that technological

progress is accumulation of knowledge, which is a form of intellectual capital. This

intellectual knowledge can be accumulated by spending on R&D and can be used to

augment future production possibilities. Schumpeterian creative destruction theory offers

new view of how competitive markets work by being motivated by innovations.

6.0 TUTOR-MARKED ASSIGNMENT

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i. Differentiate between the endogenous and the endogenous growth theories

ii. Investigates Nigeria’s growth performance in the light of some of the factors that

have been identified in growth theory as being of importance in the growth process.

7.0 REFERENCES/FURTHER READINGS

Howitt, P. (2007). Innovation, Competition and Growth: A Schumpeterian Perspective on

Canada’s Economy. C. D. Howe Institute Commentary

https://web.archive.org/web/20110717090449/http://www.cdhowe.org/pdf/commentary_

246.pdf

Tarek Khalil & Ravi Shankar (2016). Management of technology (2nd ed.). India:

McGraw Hill Education. pp372- 380.

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UNIT 4 ISSUES OF TECHNOLOGY ACQUISITION IN DEVELOPING

COUNTRIES

CONTENTS

1.0 Introduction

2.0 Objectives

3.0 Content

3.1 Technology Acquisition

3.2 Technology Acceptance Model (TAM)

3.3 Barriers to Technology Acquisition in Developing Countries.

3.4 Strategies to Acquire New Technology in Developing Countries

4.0 Conclusion

5.0 Summary

6.0 Tutor-Marked Assignments

7.0 References/Further Readings

1.0 INTRODUCTION

The problem of technology transfer is related to certain issues which includes technology

acquisition and the choice of appropriate technology. Technological development comes

from R&D, from international organizations, etc. whatever be the case, every available

sources needs to be explored when acquiring new technologies. The technology adoption

model explains how accessibility and exposure play a role in technology adoption.

2.0 OBJECTIVES

At the end of this unit, student should be able to:

Explain the different modes of technology acquisition

Discus the challenges of technological acquisition in developing countries

Ilustrate the strategies to technology adoption in developing countries

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3.0 MAIN CONTENT

3.1 Technology Acquisition

One of the major issues in technology relates to the mode of technology acquisition.

Developing new technology may come from different sources such as works of scientists,

manufacturers and other industries, universities researchers who are working in R& D

laboratories, governments and multinational corporations. Whatever may be the case,

every source needs to be explored for ideas and new technologies. Each firm has specific

sources for most of the new technologies. The question then should be how will the firm

acquire new technology, is it going to be a “make or buy decision”. In other words, should

the firm develop the technology itself or acquire it from an outside source? The decision

should be taken very carefully at this stage.

The acquisition routes of three stages are: (i) Internal (ii) External and (iii) Combined

sources.

i). Internal technology acquisition through in-house creation - This is the result of

technology development efforts that are initiated and controlled by the firm itself. Internal

acquisition requires the existence of a technological capability in the company. Internal

technology acquisition options have the advantage any innovation becomes the exclusive

property of the firm

ii). External technology acquisition- External acquisition is the process of acquiring

technologies developed by others for use in the company. External technology acquisition

generally has the advantage of reduced cost and time to implement and lower risks.

However, the technology available from outside sources is generally developed for

different applications. Therefore, external acquisition should contain an aspect of

adaptation to the acquiring company’s application.

iii). Combined sources – This is when technology acquisition involves a combination of

both external and internal activities. The essence of using a combined acquisition is to take

advantages of both internal and external sources and at the same time overcome the

limitations of both.

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3.1.1 Choice of Technology

The second major issue related to technology transfer is the choice of technology. It is

argued that it is the industrialized countries that develop technology and know- how, thus

whatever that is developed will be mainly useful to them making them become monopolists

in developing, using and managing technology. This also means that the technologies tend

to be designed for the production of high quality sophisticated goods on a large scale, using

as much as possible capital and higher level professional skills in place of sheer. In carrying

out technology transfer from developed countries to developing countries, care needs to be

taken because if the technology content and level are not appropriate, the technology will

be more harmful than good.

Such “appropriate technology” raises several questions for the international/national

managers, that is, to what extent or feasible alternative technologies are readily available?

If not available, can the cost of developing more appropriate technology be justified? The

issue of cost of the technology transfer is a very serious issue for developing countries. For

instance, 90% of the modern technology transfers to developing countries is controlled by

multinational corporations who are essentially interested in getting the highest returns from

their inventions. Even, the developing countries reacted in their own way to face the

restrictive clauses imposed by international business on their exports of technologies.

3.1.3 Creating Local Capability

Technology is not simply a blue prints that can be transferred to any part of the world

without the receiver putting any local effort. Creating local technological capability is

essential to absorb imported technology. Each time some technology is installed some local

adoption is required, which demands local technological capability. The need for local

adaptation arises from the fact that the environment in which any technology operates is

unique in a situation when it is installed. Difficulties are often found in the availability of

skilled labour, the dexterity, training, education and experience, availability and quality of

materials and components and infrastructural facilities including energy, transportation,

water and communication. The local technological capabilities are also needed in order to

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adopt technologies to local conditions to improve productivity in the operations and to

permit the attainment of international competitiveness and growth of exports.

SELF-ASSESSMENT EXERCISE

i. What is technology adoption?

ii. Discuss what determines the choice of technology adoption in developing countries.

3.2. Technology Acceptance Model (TAM)

Research on technology adoption and diffusion in developing countries focus mostly in

Information and Communication Technology and they assume that technology is readily

available, with the receiver or user deciding whether to accept or reject the technology

(Musa, Meso & Mbarika, 2005). This assumption may not hold water because the

developing regions such as sub-Saharan Africa lag behind in basic socioeconomic factors

when compared to other regions of the world. Meanwhile these factors are very important

for the day-to-day use of modern technologies (Meso & Mbarika, 2005). Therefore, to the

users of ICT, adoption is not a matter of choice, since universal access and exposure to

technology is not available. Access and exposure to basic forms of technology over a period

of time gives room for application of a more advanced types of technologies to aid in

human development efforts. Technologies adoption requires that economies should take

into consideration their cultural, historical and socioeconomic conditions at all times before

acquiring the technology.

Gallivan, (2001) posit that some theories such as the theory of planned behavior, diffusion

of innovations, social cognitive theory, and the technology acceptance model have been

used to explain technology adoption and acceptance. One of the most referenced of these

models is the Technology Acceptance Model (TAM) which suggests that successful

adoption (acceptance) of technology is dependent on its usefulness and its ease-of-use

(Davis, et al.,1989).

Technology Acceptance Model (TAM) was developed from the theory of planned behavior

(TPB), of psychology research which centres on the theory of reasoned action (Mathieson,

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et al., 2001). TAM was is different from the theory of planned behavior because it studies

decision-making processes of users whether to adopt information technology or not.

Despite the usefulness and practicability of TAM, the original model is limited when it

comes to developing economies due to the inadequacy of technology on developing

countries. Musa et al (2005) developed a more appropriate model for developing countries

starting with perceived user resource model (PUR) proposed by Mathieson, et al. (2001).

Figure 7: The Revised TAM: Merging TAM with Socio-Economic Development.

Source: Musa, Meso and Mbarika (2005)

The new model shown in Figure 3.1 incorporates the linkages between factors of

socioeconomic development and technological infrastructure (as captured by accessibility

to technology). The model also captures the individual’s perception of both positive and

negative impact factors. The positive impact factors are factors that propels a nation

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towards making fundamental improvements in its socio-economic development1, while the

negative impact factors constitute major impediments to socio-economic development. The

perceived user resources are designated by “PR”, which is the extent to which an individual

believes that the personal and organizational resources needed to use an Information

System are available. The perceived user resources include factors such as skills, human

assistance, hardware, software, time, documentation, and money [Mathieson, et al., 2001].

The new model provides the dynamics between socioeconomic development as measured

by human development indices and technology adoption that would further aid in national

(human) development efforts. The “Accessibility and Exposure to Technologies” as shown

in Figure 3.1 refers to the technology that is in place and available for use. These

technologies include related ICTs such as internets, computers, telecommunications

networks and any other form of technology in a user’s world.

The factors labeled “Perceived Positive-Impact Factors” and “Perceived Negative- Impact

Factors” impact the “Individual’s Perception of Socioeconomic Environment” (Musa, et al

2005). The extension of the perceived user resource model points out the importance of

accessibility and exposure to technologies adoption and how the various factors in

technology adoption and socioeconomic development interact with each other. Adequate

technology adoption allows a country to realize the impact of technology. It is the impact

of ICTs that is of most importance. According to Sein and Harindranath, (2004) as cited in

Musa et al (2005), research on ICT impacts posits three levels or effects:

i. First-Order or primary effects where simple old technology is substituted by old

technologies. For example, access and ability to use a tractor alleviates the

backbreaking hoe and hand-digger method of tilling the land. Another example is

when telecommunication technologies provide faster alternatives to traditional

means of communication (snail-mail). While realizing the primary effects does not

generally imply development, it paves the way for higher order effects to take place.

1 Such as health, democracy, good governance, economic productivity, social well-being, the physical environment,

roads, water and power supply, education, employment, and pressure or desire to integrate into the world economy,

etc.

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ii. Second-Order or secondary effects where a phenomenon such as technology-

enabled correspondence takes on a larger meaning, such as sharing of documents or

graphics. For example, this effect aids in co-authoring of research across vast

geographical areas.

iii. Third-Order or tertiary effects; the generation of new technology-related businesses

and societal change. For example, the introduction of communication technology

should spur the development of new businesses, for example electronic

communication-enabled media such as virtual organizations.

We suggest that sustainable economic and human development would call for a systematic

progression and maturation through these three effects. The proliferation of

telecommunications in developed countries came as a result of the need for basic

necessities of life are met, hence developing countries should learn a valuable lesson from

that.

SELF-ASSESSMENT EXERCISE

i. With the aid of a diagram, discuss the Technology Acceptance Model (TAM)

3.3. Barriers to Technology Acqusition in Developing Countries

The barriers and challallenges encountered in acquisition of technology are:

(i) Poor planning in developing countries which invariable affects the process of

receiving the new technology.

(ii) Limited understanding of the technology concept as it relates to the issues of

installing and maintenance.

(iii) Failure of recognisation of local potentials for adopting new technology

(iv) Failure to determine the possible applications of the transferred technology

(v) Presence of ethical issues witin the process of technology transfer

(vi) Restricting the feasibility study of technology transfer to just financing

assessment without evaluating the local potential adoption.

SELF-ASSESSMENT EXERCISE

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i. Highlight the challallenges encountered by developing countries in the acquisition

of technology.

3.4. Strategies to Improving Technology Acquisition in Developing Countries.

A host economy can adopt the following strategies relating to technology transfer.

(i) The host economy needs to be strong and vibrant so as to be able to absorb

technology.

(ii) There should be policies directed towards importing of technology, for instance,

government can discourage restrictive clauses partaining to technology transfer.

The policy can influence the terms and conditions of technology transfer.

(iii) Government should be able to encourage indigenous knowledge through

domestic R&D.

(iv) Countries can encourage and promote cross boarder collaborative R&D

(v) Encourage indegeous production of technology by developing state owned

enterprises.

(vi) Encourage development of state owned enterprises.

(vii) Liberalized terms of technology transfer and diffusion that would benefit both

parties.

(viii) Encourage indigenous production of technology subsequent to transfer of

technology.

SELF-ASSESSMENT EXERCISE

i. Outline the strategies to improving technology acquisition in developing countries.

ii. Explain the applicability of the technology adoption model in a developing

economy.

4. CONCLUSION

In this unit, we can conclude that technology continuously flows across boundaries of

countries, regions, companies and departments within organizations and among

individuals. The transfer of technology from one entity to another is affected through

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channels of technology flow. There may be general channels of contact among individuals

and institutions or organized programs designed for the systematic transfer of technology.

Effective and efficient technology transfer requires the formulation of a strategy and the

creation of mechanisms of transfer. These mechanisms can be technology transfer centres,

information exchange networks or organized projects that utilize special teams to affect the

transfer.

5.0 SUMMARY

In this unit, we discussed the challenges of technological transfer in developing countries

and the strategies to technology transfer. Technology is not a blue print issue that can be

acquired without creating local technological capability which is essential to absorb

imported technology. Technology can be acquired through internal sources, external

sources or a combination of both. For technology to be acquired from developed countries,

governments of developing countries needs to encourage collaborations and also encourage

R&D. Indigenous technology should also be encouraged in developing countries. The

TAM suggest that with systematic and incremental approach to development, developing

countries would be able to catch up with the rest of the world in a reasonable time frame.

6.0 TUTOR-MARKED ASSIGNMENTS

i. Discus the meaning of technology acquisition.

ii. Discuss in detail the various technology acquisition moods prevailing in Nigeria

iii. Highlight the strategies needed to acquire technology in developing countries

7.0 REFERENCES/FURTHER READINGS

Akubue, A. (2000). Appropriate technology for socioeconomic development in Third

world countries. The Journal of Technology Studies, 26(1), 33-43

https://www.jstor.org/stable/43604562

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Davis, F. D., Bagozzi, R. P., and Warshaw, P. R., (1989). User acceptance of computer

technology: A Comparison of Two Theoretical Models. Management Science

(35), 982-1003.

Gallivan, M. J., (2001). Organizational adoption and assimilation of complex

technological innovations: Development and application of a new framework.

Database for Advances in Information Systems, (35)3, 51-85.

Mathieson, K., Peacock, E., & Chin, W., (2001). Extending the technology acceptance

model: The influence of perceived user resources. Database for Advances in

Information Systems, (32)3, 86 – 112.

Musa, P. F., Meso, P., & Mbarika, V. W. (2005). Toward sustainable adoption of

technologies for human development in sub-Saharan Africa: Precursors,

diagnostics, and prescriptions. Communication for the Association of the

Information System, 15(33).

Tarek Khalil & Ravi Shankar (2016). Management of technology (2nd ed.). India:

McGraw Hill Education. pp 372- 380.

Rani, S. S., Rao, B. M., Ramaro, P., & Kumar, S. (2018). Technology transfer- Models

and Mechanism. International Journal of Mechanical engineering and

Technology, 9(6), 971-982

http://www.iaeme.com/ijmet/issues.asp?JType=IJMET&VType=9&IType=6